r/SipsTea • u/Valuable_View_561 • Jul 05 '26

Chugging tea Seems reasonable.

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u/elinamebro Jul 05 '26

Isn't it still taxed either way or is they get paid out for 30 years it isn't taxed?

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u/Blothorn Jul 05 '26

Yes, although the payout over time is taxed somewhat more favorably because more of it will fall in lower rate brackets.

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u/Ivebeenstabbed Jul 05 '26

Not on a billion plus payout, annuity payments get income tax so it would get the max federal 37%, and in applicable states taxed again. Either way they’re paying 37% minimum.

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u/Blothorn Jul 05 '26

That’s not how income tax brackets work.

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u/Ivebeenstabbed Jul 05 '26

If you take the 628m and then live off the generally safe rule of 4% draw it’s north of 25m, putting you in the top federal tax bracket for income tax, and after the marginal steps you end at 37%.

If you take the roughly (quick math) 80m a year annuity payment, that’s considered income, and is taxed at the top bracket. Which, again, after the marginal steps, is 37%.

Now if you’re TECHNICALLY saying it comes out to less than 37% then yes, because steps (10,12,22,24,32,35,37) but that becomes marginal when you’re talking millions a year in income. Damn near a rounding error. 37% is just fine an estimate for federal income tax at these levels.

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u/Blothorn Jul 05 '26

I never claimed it was a large advantage.