Stealth taxes - Some are here, some are coming

%POST_TITLE% Thumbnail

by: Cory Carlton

The term “Stealth Taxes” may not be something that you are familiar with but regardless of if you know the term you have or will feel it at some point.

Stealth taxes are the government’s way of taxing you without them calling it a tax. They have been doing it for years and continue to find new stealth taxes.

Why are they doing this? If you look at recent history and the COVID pandemic the government has been spending more money than it ever has in history. We have added trillions to our national deficit. That’s right, trillions have been spent since March 2020.

At that time, U.S. Treasury Secretary Steven Mnuchin was asked if he was concerned about the deficit. He acknowledged the spending spree the government had just gone on and add: “In different times, we’ll fix the deficit. This is not the time to worry about it.”

The economy did need help. Families needed help, of course. But there will be a time to worry about it. Maybe not now, but in the future. Not for future generations, but our future.

So, taxes are going to go up. Everyone agrees taxes must go up. We know they are already scheduled to go up in 2026.

But what president is going to get elected by saying they will raise taxes? The government will find a way to raise taxes. Here is how they are currently doing it…

Tax brackets: If you look at current tax brackets, CLICK HERE TO SEE THEM, you will see for a married couple filing jointly once they make over $80,051 for the year, their tax bracket jumps from 12% to 22%. That is a huge jump. In 2026 we will see different numbers that will lead to higher income earners paying higher taxes.

Deductions: The government has changed the deduction amounts people are able to receive for various things. By lowering your deductions, the government is increasing your taxes.

So, a president may say they did not raise individual income taxes but if they lowered your deductions then that is exactly what happened. 

Social Security tax: If you make over a certain amount of income in retirement then a percentage of your Social Security is going to be taxed. You can see the details and numbers here. Now they actually call this one a tax but this is a government-sponsored benefit for seniors and the government is taxing it.

You paid into the Social Security program all your working years, the government used your money, then when you go to use it, they tax it. Sounds like they are double-dipping a bit. 

Medicare Surcharge: This is something we deal with all the time. The government decided that they will charge people a “surcharge” for their Medicare Parts B and D premiums if they “make too much money.”

The government calls this a surcharge, but it is a tax on people making more money. Plain and simple. To the tune of thousands of dollars, a year extra on Medicare premiums for no extra benefit.

So, good news/bad news time. The bad news is that there are some taxes that you are going to have to pay. No way around that. The good news is there are ways that you can prepare to pay the bare minimum amount of taxes possible. Basically, this gets you out of paying optional taxes.

Since we know taxes are going to go up do you think it is best to put all of your retirement savings in a tax-deferred vehicle, like a 401K or IRA? Since taxes are going to be higher in the future, and at unknown rates, your income is at risk from income taxes and stealth taxes.

All of your income from 401Ks, IRAs, 403Bs, anything tax-deferred, will count toward your Social Security being taxed and the Medicare surcharge.

This is where we find most peoples’ retirement plans are incomplete. Because they do not have a plan to protect them against higher taxes and stealth taxes.

If you save in the right financial vehicles, like a Section 7702 plan, or utilize Roth IRAs, or do Roth conversions, you can significantly reduce the taxes you will pay in retirement, regardless of how high the government takes our taxes. And, you could avoid having to pay any taxes on Social Security, assuming it is still there, and avoid the Medicare surcharge.

By utilizing these plans we have been able to help people save hundreds of thousands of dollars in taxes in retirement while at the same time giving them 60% - 80% more income than if they had just kept on saving in their 401K or IRA exclusively.

Taxes are going to be a huge risk for retirees in the future. Known taxes and stealth taxes. Why not make sure you immunize your retirement from tax risk and give yourself more certainty with your retirement income plan?

To see how you can protect yourself from future taxes, including stealth taxes, contact us and we can do a free review of your current plan and show you how much you can save in taxes and how much more income you can have.

ABOUT THE AUTHOR: Cory Carlton is the co-founder of Both Hands Financial Group. He is a nerd [the politically correct term would be passionate] about helping people reduce and save as much on taxes as possible. There are so many risks that can negatively impact someone's retirement plan and taxes are rarely accounted for. They are top of mind for Cory and all the advisors at Both Hands FG. Cory has helped people use tax law to their advantage since 2008 to avoid paying optional taxes. To see if you qualify, contact Cory at 615.975.8677 or email him at Or, reach out to your agent for more information. When Cory is not being a huge nerd working, he is likely being a nerd at other things with his family. Cory is married to Emily and they have three daughters. You will often find time outside exploring, playing games, or as his kids like to do, LARPing.