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Understanding IRMAA in 2026: What Income Really Counts for Medicare’s Income-Related Monthly Adjustment Amount?

March 6, 2026

For IRMAA (Income‑Related Monthly Adjustment Amount) purposes, Medicare looks at a very specific definition of income. It is not your gross income and it is not a separate Medicare calculation—it comes directly from your federal tax return. Below is the clear, authoritative breakdown.

The income used for IRMAA: Modified Adjusted Gross Income (MAGI)

For IRMAA, MAGI is defined by Social Security as:

**Adjusted Gross Income (AGI) and tax‑exempt interest income**

This definition is set by statute and SSA policy and is the only income measure used to determine IRMAA thresholds.

Step 1: What counts in AGI (Form 1040, Line 11)

If it appears in your Adjusted Gross Income, it generally counts toward IRMAA. Common AGI components include:

  • Wages, salaries, bonuses, consulting income
  • Traditional IRA, 401(k), 403(b) withdrawals and RMDs
  • Roth conversions (taxable in the year converted)
  • Pension and annuity income
  • Capital gains (stocks, mutual funds, real estate, businesses)
  • Interest and dividends (taxable accounts)
  • Business, rental, and pass‑through (K‑1) income
  • Taxable portion of Social Security benefits (up to 85%)

Only the taxable portion of Social Security is included—not the full benefit amount.

Step 2: What gets added back to AGI for IRMAA

After AGI is determined, SSA adds:

  • Tax‑exempt interest income
    • Most commonly municipal bond interest
    • Reported on Form 1040, Line 2a

This is the most common “surprise” that pushes people over an IRMAA threshold, because it is tax‑free for income tax purposes but not IRMAA‑free.    

In simple terms

For IRMAA:

MAGI = AGI + tax‑exempt interest

There are no other add‑backs (foreign income exclusions, HSA rules, etc. do not apply here—this is a narrower definition than other MAGI uses).

Income that does NOT count toward IRMAA

These items do not increase MAGI and therefore do not affect IRMAA thresholds:

  • Qualified Roth IRA withdrawals
  • HSA withdrawals for qualified medical expenses
  • Return of principal (selling an asset with no gain)
  • Gifts and inheritances
  • Life insurance death benefits
  • Loan proceeds

If it does not appear in AGI and is not tax‑exempt interest, Medicare does not see it.

Which tax year is used

IRMAA uses a two‑year lookback:

  • 2026 Medicare premiums → 2024 tax return
  • SSA uses IRS‑reported MAGI
  • If income has dropped due to a qualifying life event, an appeal is available

Why this matters

  • IRMAA thresholds are cliff‑based—$1 over moves you into a higher bracket
  • One‑time events (Roth conversions, asset sales, severance) can trigger a full year of higher Part B and Part D premiums
  • Planning focuses on timing, not just total income