Annuity Payout Calculator 2026: SPIA Exclusion Ratio per $100,000

What the Code and Publication 939 say

Everything in this section is in the Code or in IRS Publication 939, “General Rule for Pensions and Annuities” (Rev. December 2025, dated January 29, 2026). The publication says to use the General Rule if you receive payments from “a nonqualified plan (such as a private annuity, a purchased commercial annuity, or a nonqualified employee plan)”. A SPIA bought with after-tax money is a purchased commercial annuity.

Source: 26 U.S.C. 72(b), (c) and IRS Publication 939 (Rev. 12-2025), read and saved on October 22, 2026.

On the “annuity payout calculator” search. Most pages that rank for it quote a carrier payout and stop. A payout rate is not public primary data, so we do not publish “best rates today.” What the IRS publishes is the tax table, and the CDC and the Treasury publish the inputs for a price benchmark. The rest of this page is built from those three sources.

The year the exclusion stops: the Table V multiple

Because the tax-free amount each year is the premium divided by the multiple, the premium is recovered after the multiple in years, regardless of payout rate (our arithmetic; the worksheet rounds the ratio to three decimals, so the last year can be a few dollars off). Table V is a single table for both sexes; the publication says age is “the age at the birthday nearest to the annuity starting date.”

Source: IRS Publication 939 Table V; CDC/NCHS, United States Life Tables, 2024 (NVSR vol. 75 no. 5), Tables 2 and 3; survival to age plus multiple interpolated between whole ages (our arithmetic).

Two readings follow. The unisex IRS multiple (20.0 at 65) sits between the CDC life expectancy at 65 for men (18.4 years) and for women (20.8 years), so a woman usually recovers her cost tax-free around the end of her expected life, while a man’s fully taxable years are the rarer outcome. And the fully taxable years are the minority outcome at 65 for men (46.1% alive at 85) and the majority for women (57.4%).

Exclusion ratio by age and payout rate

This is the calculator, as a table. Pick the payout you were quoted (annual payments divided by premium) and read the share of each payment that is tax-free. The formula is the worksheet: investment in the contract divided by (12 times the monthly payment times the Table V multiple), rounded to three decimals.

Source: IRS Publication 939 Table V and the General Rule worksheet; our arithmetic. * The ratio cannot exceed 100%: 72(b)(2) limits the exclusion to the unrecovered investment, so the payments are tax-free until the premium is back and fully taxable after.

Worked example (our arithmetic). A 65-year-old pays $100,000 for $750 a month for life, $9,000 a year. Expected return is $9,000 times 20.0, or $180,000. The ratio is $100,000 divided by $180,000, or 55.6%, so $416.67 of each $750 payment is tax-free and $333.33 is taxable. The publication’s own example is the same arithmetic at age 66: $500 a month, multiple 19.2, expected return $115,200. For quarterly, semiannual or annual payments the publication adjusts the multiple by tenths of a year depending on the months to the first payment; monthly payments need no adjustment.

A payout benchmark from the Treasury curve and the CDC table

We priced a life-only annuity paid monthly in arrears: the present value of a dollar a month for as long as the buyer lives, using the CDC 2024 male, female and total-population life tables (no mortality improvement, no adjustment for the better health of people who buy annuities) and discount factors bootstrapped from the Treasury par yield curve of October 21, 2026 (1-year 4.52%, 5-year 4.95%, 10-year 5.13%, 20-year 5.47%, 30-year 5.42%). The result is the payout a carrier would give with no expenses, no profit, no state premium tax and average mortality. It is a model, not a quote. Annuity buyers tend to live longer than the population, which pushes real payouts down, and expenses and margins push them down further; the carrier’s own investment yield can push them the other way.

Source: Treasury par yield curve, October 21, 2026 (home.treasury.gov); CDC/NCHS United States Life Tables, 2024, Tables 1 to 3; IRS Publication 939 Table V. Our arithmetic.

One buyer, year by year: a man at 65 with $100,000

Using the modelled $9,085 (our arithmetic). The ratio is 55.0% ($100,000 divided by $9,085 times 20.0, rounded to three decimals). The after-tax columns apply an illustrative federal ordinary rate to the taxable part only; they leave out the net investment income tax that Pub. 939 says applies to nonqualified annuity income, and state tax.

Source: IRS Publication 939; our arithmetic. The 24%, 32% and 37% rates are illustrations, not a statement about your bracket.

If the buyer dies in year 12 with about $40,000 of the premium still unrecovered, 72(b)(3) lets that unrecovered investment be deducted on the last return; Pub. 939 calls it an other itemized deduction on the decedent’s final return, determined without regard to any refund feature adjustment. If the buyer lives to 100, the total excluded is still $100,000: the ratio only decides when it comes.

Against the net rent of the property you sold

The question behind many searches by property owners is whether the payout replaces the rent. The payout is higher than any plausible net rent because it returns your capital. The next table puts the two side by side per $100,000 of sale proceeds, with the rent as an assumption (net rent is not data we hold).

Source: modelled payout above; net rents are assumptions. Our arithmetic.

The measure that matters is what happens if payments end early. With the same $9,085 a year:

Source: our arithmetic, annual payments in arrears; survival from CDC/NCHS United States Life Tables, 2024.

The break-even against the 10-year Treasury yield of 5.13% is 17 years of payments (age 82): the present value of 17 payments of $9,085 at 5.13% reaches $100,000 (our arithmetic). The CDC 2024 table has 58.1% of men and 68.4% of women alive 17 years after 65. Neither choice is simply better: the property leaves an asset to heirs and carries vacancy and repair risk; the annuity leaves nothing unless you add years certain and moves longevity risk to the insurer. The guarantee is only as good as the insurer, and state guaranty limits differ by state; we have not read those limits for this page.

Two lives: joint and survivor annuities

For a joint and survivor annuity the expected return uses Table VI. The Pub. 939 example for ages 67 and 70 uses 22.0, and the table gives 25.0 for two 65-year-olds. The model below prices a payment that continues in full until the second death (man older, woman as shown).

Source: IRS Publication 939 Table VI; Treasury and CDC inputs as above; our arithmetic. We assume the publication’s zero-value refund rule for joint annuities applies (both annuitants 74 or younger, payments guaranteed under 2 1/2 years, survivor annuity at least 50%).

Life with years certain: the refund feature

If the contract pays a beneficiary the rest of a guaranteed period, the investment in the contract is reduced by the value of the refund feature (26 U.S.C. 72(c)(2)). Pub. 939 gives the percentage in Table VII, applied to the lesser of the premium and the total guaranteed payments. The publication’s example: age 65, $21,053 premium, 18 years guaranteed, 15% gives $3,158, and an investment of $17,895.

Source: IRS Publication 939 Table VII and Table V; modelled payouts; our arithmetic. The text extraction of the PDF offsets each age label of Table VII by one row; we checked it against the publication’s example (age 65 with 18 years gives 15%, with 17 years 14%).

Money that is not after-tax money

The General Rule is for annuities with a cost in them. A SPIA bought inside a traditional IRA has, as a rule, no after-tax cost to recover, so on our reading every payment is ordinary income; the contract built for that case is covered in our QLAC guide. If the money comes from another annuity, a 1035 exchange carries the basis over, and the mechanics are in our 1035 exchange page. Our 1035 page assumes an expected return of $480,000 for a $24,000 annuity at 65; that is exactly the Table V multiple of 20.0 above, and its 52.08% differs from the worksheet’s 52.1% only by the three-decimal rounding.

If the cash comes from selling a property, the sale’s own tax comes first: see our pages on the installment sale and the deferred sales trust, and on the net investment income tax that applies to the taxable part of the payments. For another income stream before 59 1/2, see our 72(t) payout tables. How rental and annuity income feed the taxable share of Social Security is in our provisional income guide.

Before you sign anything

• Get the numbers in writing. Premium, monthly payment, and the insurer’s “investment in the contract” and “expected return”; the Form 1099-R will show the taxable amount, and your return should match the worksheet.
• Compare the quote with the benchmark. A payout well under the modelled figure for your age and sex is paying for the carrier’s costs and the guarantee; one above it deserves a look at the carrier’s financial strength.
• Know which clock you are on. Age 65 means 20 years of partial exclusion and the rest fully taxable. A larger payout at the same age lowers the exclusion ratio, not the length.
• Decide what you want to leave. Years certain keeps a refund for heirs and costs payout; the table shows the price in dollars.

What a reader can do with this

1. Find your age in the exclusion table and read the ratio at the payout you were quoted; multiply by your annual payment for the tax-free dollars.
2. Add the age and the Table V multiple to see the year payments become fully taxable, and set it against the survival share in the stop-age table.
3. Compare any quote with the modelled payout for your age and sex; the gap is the carrier’s price for risk and cost, less any better-than-average mortality it assumes.
4. If you are replacing rent, use the break-even table to see how many years of payments make the swap worthwhile compared with a Treasury yield.

FAQ

Sources, read and saved on October 22, 2026: IRS Publication 939 (Rev. 12-2025); 26 U.S.C. 72 (Cornell Legal Information Institute); U.S. Department of the Treasury, daily par yield curve rates for 2026 (data through October 21, 2026); CDC/NCHS, United States Life Tables, 2024 (National Vital Statistics Reports vol. 75 no. 5, Tables 1 to 3). The payouts, break-evens, after-tax figures and the stop ages are our arithmetic from those documents; net rents and tax rates are assumptions. This is analysis of public documents, not investment, legal or tax advice.