Should You Prepay Taxes Before Possible Policy Changes? Experts Say Not to Chase the Headlines

With election season approaching, some taxpayers may be tempted to pay now in case lawmakers later raise rates. But the advisors MoneyLion consulted said that kind of reaction is usually a mistake.

"Don't try to outguess Congress," said Mark Clark, a certified financial planner and founder of Prestige Advisors. "Plan around the brackets you can actually see, which are your own."

What 'Permanent' Actually Means

Tiffany Nellums, tax principal at Nexera Tax, said the One Big Beautiful Bill Act, signed in July 2025, made the current federal tax brackets of 10% to 37% permanent.

That does not mean the rates can never change. Clark noted that "permanent" simply means the brackets do not have an expiration date, though Congress still retains the power to revise them.

For that reason, Nellums said it is usually unwise to act on speculation. Paying taxes early "to guard against a change nobody has passed is rarely a good trade," she said.

What Locking In Usually Means

In most cases, locking in a tax rate refers to a Roth conversion. That involves moving money from a traditional IRA to a Roth account, paying tax now, and allowing the assets to grow tax-free afterward. Nellums said this strategy tends to make sense in three situations.

Where the Real Opportunity Often Is

For many retirees, the greater tax risk is not a change in Washington. Clark said personal tax rates often rise later in life, when required minimum distributions begin, Social Security starts, or a spouse dies and the surviving partner files as single.

Hans Goldstein, founder of the Retirement Literacy Foundation, sees the opening the same way.

"For most retirees the rate worth locking in is not about a future law change," he said. "It is the low-bracket window between retiring and starting required distributions at 73."

That window can offer substantial room. In 2026, a married couple with both spouses age 65 or older can deduct up to $47,500 before any income is taxed, thanks to the $32,200 standard deduction, a $1,650 additional deduction for each spouse, and the new $6,000 senior deduction for each spouse.

Goldstein described a partial conversion that fills those lower brackets as "often the cleanest Q4 move."

Tax Consequences People Often Overlook

Conversion income increases adjusted gross income, and Nellums said that can trigger a chain reaction. It may reduce the new deduction for taxpayers age 65 and older, lower the expanded state and local tax deduction for higher earners, cut health insurance marketplace subsidies, and push Medicare premiums higher two years later.

Goldstein highlighted two of those risks in particular. The $6,000-per-person senior deduction begins to phase out above $150,000 of modified adjusted gross income for a couple. A conversion that lifts income past a Medicare IRMAA threshold can also increase Part B and Part D premiums two years later.

Smaller Moves Can Be Smarter

Both advisors preferred a gradual approach rather than a large one-time conversion. "Convert in slices, not one big swing," Clark said.

Nellums said it is often better to use up your current bracket without crossing income thresholds than to convert a large lump sum all at once.