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So, for example, if during retirement I am not working and I am pulling 40,000 dollars a year out of my previously deductible traditional IRA, then I will be taxed on that 40,000 at the current income tax rate for that tax bracket.

Basically correct, although you wouldn't be taxed on the whole $40,000, because of deductions and exemptions. Also, your income may fall into more than one bracket so you pay x% on some and y% on some. The Tax Rate Schedules in the 1040 instructions show you how the brackets work.

TMF ExRO
Phil Marti
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