Tax on annuity income is typically paid in the year the income is received. Annuity payments are generally considered ordinary income and are taxed accordingly. The tax withheld from your annuity payments depends on the type of annuity you have and how the payments are structured. If you have a deferred annuity, you may have the option to make a one-time election to have taxes withheld at the time of annuitization. However, for immediate annuities, taxes are generally withheld at a flat rate. It's important to note that tax laws and regulations can change, so it's always a good idea to consult a tax professional or financial advisor for the most accurate and up-to-date information.