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

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.

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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.

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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.    

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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).

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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.

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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

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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

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Frequently Asked Questions

What is IRMAA and how does it affect Medicare premiums?

IRMAA (Income-Related Monthly Adjustment Amount) is a surcharge added to Medicare Part B and Part D premiums for beneficiaries whose Modified Adjusted Gross Income exceeds certain thresholds. In 2026, the threshold is $109,000 for individuals and $218,000 for married couples filing jointly. When income exceeds these amounts, Medicare premiums increase — and the increase is not gradual. Crossing the threshold by even $1 triggers the entire surcharge for both spouses for the following two years. The standard Medicare Part B premium in 2026 is $185.00 per month, but IRMAA surcharges can more than double that amount.

What income counts toward IRMAA in 2026?

IRMAA is based on your Modified Adjusted Gross Income (MAGI) from two years prior — your 2024 income determines your 2026 Medicare premiums. MAGI for IRMAA includes wages, self-employment income, Social Security benefits (up to 85%), IRA and 401(k) distributions, pension income, capital gains, rental income, and taxable interest. A common and costly surprise: tax-exempt municipal bond interest is added back into MAGI for IRMAA calculations even though it is not taxable income. Roth IRA distributions and qualified HSA withdrawals are NOT counted toward MAGI.

How can I avoid triggering IRMAA surcharges?

Managing IRMAA exposure requires proactive income planning 2-3 years before retirement. Strategies include: spreading large IRA withdrawals or Roth conversions across multiple years to stay below the income threshold; timing the sale of appreciated assets carefully; using Qualified Charitable Distributions (QCDs) after age 70½ to satisfy RMDs without increasing MAGI; and considering the timing of one-time income events such as property sales. If your income has decreased due to a qualifying life event (retirement, death of spouse, divorce), you can appeal your IRMAA designation using SSA Form SSA-44.

What is the IRMAA two-year lookback and why does it matter?

IRMAA is calculated using your tax return from two years prior. In 2026, Medicare uses your 2024 tax return to determine surcharges. This means financial decisions made in 2024 — a large Roth conversion, a property sale, a significant capital gain — may result in higher Medicare premiums two years later in 2026 and 2027. This two-year lag is one of the most common and costly planning blind spots for retirees. Proactive tax planning must look 2-3 years ahead, not just at the current year’s return.

Can I appeal an IRMAA determination?

Yes. If your income has decreased since the tax year used to calculate your IRMAA — due to retirement, death of a spouse, divorce, reduced work hours, or loss of income-producing property — you can request a reduction using SSA Form SSA-44 (Medicare Income-Related Monthly Adjustment Amount — Life-Changing Event). Submit it to Social Security by mail, fax, or in person. Processing typically takes 30-90 days and may require persistence. The SSA sends annual IRMAA determination letters in November; review yours carefully as soon as it arrives.

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