Taxes is another topic that people don’t like to talk about or plan for.

If you live or work in the United States, you are subject to taxation by the federal government and at least one state government (many local governments also levy an income tax). Here’s the bright side of paying income taxes: you must have made some money if you owe taxes. Now, on to the rest of it.

Throughout life, including during retirement, tax obligations depend upon individual circumstances. Tax laws can be complicated, and they often change significantly from one year to the next. (That’s why it’s important to consult a tax attorney or CPA when developing a comprehensive retirement plan.) For now, it should suffice to say that there are two general categories of taxes relevant here: taxes you pay during your life (income tax), and taxes that are owed after death (estate taxes).

Taxes You Pay During Life: Income Taxes

Income taxes are calculated based on your taxable income, which (broadly defined) is your total income minus deductions permitted by the applicable tax code. Individuals may deduct an “exemption” called a personal allowance, and may also deduct certain expenses (e.g., interest on a home mortgage, state taxes, charitable contributions, etc.). (Some expenses are deductible only to a limit.)

Capital gains (e.g. money you’ve made from profitable investments) are taxable, and capital losses (e.g., money you’ve lost on poor investments) are deductible but only to a point. Short-Term Capital Gains (profits from assets held for one year or less) are taxed at the same rate as income (10–39.6% in 2015). Long-Term Capital Gains (profits from assets held for longer than one year) and income from corporate dividends are taxed at a lower rate (generally 15% or 20%, though upper-income investors may pay additional surcharges) than income. The top 25% of wage earners pay about two-thirds of the nation’s taxes.

You self-assess your income tax. (Although this system is widely criticized as inefficient, it’s unlikely to change anytime soon.) The amount you calculate may, of course, be adjusted by the tax authorities if they disagree with you.

One thing that seems counterintuitive but bears noting is that Social Security income is taxable as income. Many people incorrectly assume they will pay lower taxes upon retirement, but, depending on how you’ve saved for retirement and whether you have a pension, you may very well remain in the same tax bracket when you retire that you were in during your working years.

If you’ve had the good fortune, foresight, and diligence to earn a pension, Uncle Sam gets a piece of that too, just as he gets a piece of your dividend payments, interest, and Social Security payments. On top of that, your Individual Retirement Accounts (IRAs) and 401ks may contain taxable assets. Naturally, inheritances are also taxable.