When Are Annuities Taxable? 
When are annuities taxable ? Annuities are taxable during the distribution phase of ownership . While in the accumulation phase an annuity does offer protection from current tax liabilities . Taxes are deferred to the distribution phase at the normal income tax rate bracket you retirement income may fall into . Depending on how you funded your annuity , a portion or all of the distribution could be taxable income . Please note : you only pay taxes on the amounts withdrawn from an annuity during distribution phase . So taxes are due over the years rather than at one time . 