Medicare IRMAA Surcharges: How Your Retirement Income Raises Your Premiums
One extra dollar of income can cost a couple over $1,500 in higher Medicare premiums. IRMAA is a cliff, not a slope — which makes it one of the most plannable taxes in retirement.
What IRMAA is
The Income-Related Monthly Adjustment Amount (IRMAA) is a surcharge added to Medicare Part B and Part D premiums for higher-income retirees. It is not a tax on a return you file — it is deducted from Social Security or billed directly, and many retirees only discover it when the letter arrives.
The two-year lookback
IRMAA for a given year is based on your modified adjusted gross income (MAGI) from two years earlier. Your 2026 premiums are set by your 2024 tax return. This is why income decisions at age 63 already matter: they set the premiums you pay at 65, when Medicare begins.
Cliffs, not slopes
IRMAA uses hard income tiers. Landing one dollar above a threshold triggers the full surcharge for that tier for both spouses, all year. For a married couple, crossing the first threshold adds roughly $1,500–$1,800 per year in combined Part B and D surcharges — and higher tiers add several thousand more.
That structure makes IRMAA unusual: it is binary. Managing income just below a cliff has an outsized payoff.
What counts toward MAGI
- IRA and 401(k) withdrawals, including RMDs
- Roth conversion income
- Capital gains, dividends, and interest — including municipal bond interest (added back for MAGI)
- The taxable portion of Social Security
Notably not counted: qualified Roth withdrawals, QCDs, HSA distributions, and loan proceeds.
Planning moves that manage IRMAA
- Time large Roth conversions before age 63, or size them deliberately against the tier thresholds afterward.
- Use QCDs after 70½ to satisfy RMDs without adding to MAGI.
- Draw from Roth accounts in years when one more IRA dollar would cross a cliff.
- Spread capital gains across years instead of realizing them all at once.
- File Form SSA-44 if a life-changing event (retirement, death of a spouse, divorce) has reduced your income since the lookback year — the surcharge can be reduced or removed.
The bottom line
IRMAA rewards multi-year planning more than almost any other retirement tax. Because it is set two years ahead by income you control — withdrawals, conversions, gains — a year-by-year projection can flag cliff years in advance and route income around them.