If you’ve been following the news over the last few years, you likely heard about the "2026 tax cliff", that looming moment when the Tax Cuts and Jobs Act (TCJA) was set to expire, sending rates back to the higher levels of a decade ago.
Well, it’s June 2026, and as we’ve seen, the landscape looks a little different than the doomsday predictions suggested. Thanks to the One Big Beautiful Bill Act (OBBBA) of 2025, many of those lower tax brackets were extended. However, "extended" doesn't mean "exactly the same."
The rules of the game have shifted. From new phase-outs for senior deductions to a higher but more complex SALT cap, successful retirement planning in 2026 is no longer about a one-time "pre-sunset" rush. It’s about precision.
At Mau Sanchez Capital, we specialize in helping families navigate these nuances. While Texas Hill Country Retirement is your go-to resource for the best wineries in Fredericksburg or luxury ranchettes in Wimberley, our firm focuses on the tactical financial strategies: like the multi-year Roth conversion: that make that lifestyle possible.
Why a Roth Conversion is Still Your Best Move in 2026
The core benefits of a Roth conversion haven't changed, even if the tax brackets have. When you move money from a Traditional IRA or 401(k) into a Roth IRA, you pay taxes on that money now to enjoy three massive advantages later:
- Tax-Free Growth for Life: Once the money is in the Roth, you never pay taxes on the growth or the withdrawals again (provided you follow the simple five-year rule).
- No Required Minimum Distributions (RMDs): Unlike Traditional IRAs, Roth IRAs don't force you to take money out starting at age 73. You keep control of your capital.
- A Gift to Your Heirs: Passing down a tax-free Roth IRA is one of the most efficient ways to support your family without leaving them a massive tax bill.
"The best time to pay taxes is when you choose to, not when the government forces you to." : Mau Sanchez
The 2026 Strategy: Managing Your "Effective" Tax Rate
In previous years, the strategy was simple: "Fill up the 24% bracket." In 2026, the strategy is more surgical. You need to watch out for "shadow taxes": phase-outs that make your actual tax rate higher than what the tables say.
1. The Senior Deduction Phase-Out
For those 65 and older, the "senior deduction" is a great perk. But in 2026, it starts to disappear once your Modified Adjusted Gross Income (MAGI) hits $150,000 (for married couples). If a large Roth conversion pushes you over that limit, you aren't just paying the 22% or 24% tax rate; you’re also losing a valuable deduction, which effectively raises your tax bill.
2. The New SALT Cap Reality
The SALT (State and Local Tax) deduction cap increased to roughly $40,400 for 2026. This is great news for those of us in high-property-tax areas of the Hill Country. However, this deduction begins to phase down again once your income hits about $505,000.
At Mau Sanchez Capital, we work with our clients to model these specific thresholds. We don't want a Roth conversion intended to save you money in the long run to accidentally trigger a massive tax bill today.
Mastering the "Trough Years"
The most powerful window for a Roth conversion is what we call the "trough years." This is the period between when you stop receiving a C-suite salary and when you are forced to start taking Strategic RMDs at age 73.
During these years, your taxable income is often at its lowest point. This gives you "room" in the lower tax brackets to convert portions of your Traditional IRA to a Roth. Instead of doing one giant conversion that lands you in the 37% bracket, we often recommend a multi-year "bracket filling" strategy.
By spreading the conversion over five or six years, you can potentially stay in the 22% or 24% range, systematically moving your wealth into a tax-free environment while keeping more of your money working for you in the publicly traded markets.
Don't Forget IRMAA: The Hidden Medicare Cost
One detail often overlooked is how a Roth conversion affects your Medicare premiums. Your 2026 income determines what you pay for Medicare in 2028. This is known as the Income-Related Monthly Adjustment Amount (IRMAA).
If a Roth conversion pushes your income just $1 over an IRMAA threshold, your monthly premiums could jump significantly. Our team at Mau Sanchez Capital includes these Medicare "cliffs" in our conversion projections to ensure there are no expensive surprises two years down the line.
Living the Hill Country Dream
The ultimate goal of a 2026 Roth conversion isn't just to see a different number on a spreadsheet. It’s about the freedom that comes with tax-efficient wealth.
Whether you’re looking to purchase a luxury ranchette with enough acreage for a private vineyard or you want to spend your weekends exploring the exclusive social clubs of the Hill Country, having a tax-free bucket of capital gives you options.
When your income is "Roth-sourced," it doesn't count toward the taxability of your Social Security or increase your Medicare premiums. It is pure, flexible capital for the life you’ve earned.
Next Steps for Your 2026 Strategy
Roth conversions are a powerful tool, but they aren't one-size-fits-all. The "right" amount to convert depends on your unique mix of assets, your long-term income goals, and your vision for your Hill Country retirement.
As we move through the middle of 2026, now is the time to run your tax projections. Waiting until December leaves you with very little room to adjust your strategy if your investment portfolio has seen significant growth.
Schedule a call with a fiduciary financial advisor today: https://calendly.com/portafoliocapital/15min
Portafolio Capital Management dba Mau Sanchez Capital is a Registered Investment Adviser. This content is for informational purposes only and does not constitute investment advice or a solicitation to buy or sell any security. Advisory services are provided only pursuant to a written advisory agreement. We are not tax advisors and recommend consulting with a qualified tax professional regarding your specific situation.
Ready to Learn More?
If you're still exploring what life in the hills looks like, check out our guide on savoring the slow life or learn more about the professional wealth management services of Mau Sanchez Capital at portafoliocapital.com. You can also reach our office directly at (512) 593-8380.
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