IRMAA Explained: How It Works, 2025–2026 Income Limits, and How to Control It

If you’re on Medicare (or close to it), IRMAA can be one of the most frustrating “surprise” costs in retirement.

IRMAA stands for Income-Related Monthly Adjustment Amount. It’s an income-based surcharge added to your Medicare costs when your income is above certain thresholds. It affects:

• Medicare Part B (doctor/outpatient coverage) — added to your monthly Part B premium

• Medicare Part D (prescription drug coverage) — added on top of your plan’s Part D premium

The key planning challenge: IRMAA is based on your tax return from two years ago, using a Medicare version of “income” called MAGI.

1) What “income” does Medicare use for IRMAA?

For IRMAA, MAGI = AGI + tax-exempt interest. Practically, that’s typically Form 1040 line 11 (AGI) plus line 2a (tax-exempt interest).

Two big takeaways:

• Municipal bond interest still counts (because it’s tax-exempt interest).

• IRMAA is not about “cash flow”—it’s about tax-return income.

2) The two-year lookback (why 2026 depends on 2024 income)

Social Security (SSA) generally uses the most recent tax return IRS provides—typically two years prior (not more than three years prior). Example: 2026 premiums are generally based on 2024 tax return information.

That means:

• 2026 IRMAA is generally based on 2024 MAGI

3) 2026 IRMAA brackets (based on 2024 MAGI)

Standard Part B premium in 2026 is $202.90/month.

Part B total monthly premium (2026)

2024 MAGI 2026 Part B total premium (per person / month)

Single / HOH / QW

≤ $109,000 $202.90  

$109,000–$137,000 $284.10  

$137,000–$171,000 $405.80  

$171,000–$205,000 $527.50  

$205,000–$500,000 $649.20   ≥ $500,000 $689.90

Married Filing Jointly

≤ $218,000 $202.90  

$218,000–$274,000 $284.10  

$274,000–$342,000 $405.80  

$342,000–$410,000 $527.50  

$410,000–$750,000 $649.20  

≥ $750,000 $689.90

Married Filing Separately (lived with spouse)

≤ $109,000 $202.90  

$109,000–$391,000 $649.20  

≥ $391,000 $689.90

Part D IRMAA surcharge (adds to your plan premium) — 2026

2024 MAGI 2026 Part D IRMAA (per person / month)

Single / HOH / QW

≤ $109,000 $0.00  

$109,000–$137,000 $14.50  

$137,000–$171,000 $37.50  

$171,000–$205,000 $60.40  

$205,000–$500,000 $83.30  

≥ $500,000 $91.00

Married Filing Jointly

≤ $218,000 $0.00  

$218,000–$274,000 $14.50  

$274,000–$342,000 $37.50  

$342,000–$410,000 $60.40  

$410,000–$750,000 $83.30  

≥ $750,000 $91.00

Married Filing Separately (lived with spouse)

≤ $109,000 $0.00  

$109,000–$391,000 $83.30  

≥ $391,000 $91.00

4) How to affect IRMAA (positively and negatively)

Ways to reduce or avoid IRMAA (the “positive” moves)

These are common planning levers that can help keep MAGI under the next threshold:

• Manage the timing of IRA/401(k) withdrawals
  Large taxable distributions increase AGI → increase MAGI.

• Roth strategy (done carefully)
  Roth conversions increase income in the year of the conversion (so they can increase IRMAA short-term)—but can reduce future IRMAA by shrinking future RMDs. The timing matters a lot because of the two-year lookback.

• Qualified Charitable Distributions (QCDs) (if charitably inclined and eligible)
  QCDs can help satisfy RMDs while keeping the distribution out of AGI (which can help MAGI).

• Capital gain planning
  Harvest gains in lower-income years, watch for big one-time sales, and consider spreading income events when possible.

• Be careful with tax-exempt interest
  Since tax-exempt interest counts in MAGI, a shift into muni bonds can unintentionally increase IRMAA exposure.

• Look for “income smoothing” opportunities
  For example: coordinating retirement date, severance, bonuses, and asset sales to avoid stacking income into one year.

Moves that can raise IRMAA (the “negative” triggers)

These are the common ways people accidentally trip a higher bracket:

• Large Roth conversions in a single year (raises MAGI that year)

• Selling a highly appreciated asset (real estate, business, concentrated stock) and creating a big capital gain

• Big IRA distributions (including large RMDs if planning is delayed)

• High tax-exempt interest (muni bond interest) boosting MAGI

• One-time income spikes (severance, RSUs, large bonuses, etc.)

Even a $1 of MAGI over a threshold can move you into the next tier—so threshold “guardrails” matter.

5) What if your income dropped recently?

(IRMAA appeals)

Because of the two-year lookback, your IRMAA may be based on income that no longer reflects your current reality. In some cases—especially after certain life-changing events (like retirement)—you may be able to request a reduction/appeal with SSA.

Bottom line

IRMAA isn’t a penalty—it’s a formula. But it’s a formula you can plan around when you understand:

1. What income counts (MAGI)

2. The two-year lookback

3. Where the 2025 and 2026 thresholds actually are

If you have questions about your IRMAA amounts and how financial decisions can alter your MAGI and directly affect your IRMAA, make an appointment.