IRMAA Explained: How Retirement Income Can Raise Your Medicare Premiums
IRMAA can turn a tax decision into a Medicare-premium decision too. Learn the 2026 thresholds, the two-year lookback and why Roth conversions, capital gains and retirement itself can change the result.
This is original Terra educational content built from current Centers for Medicare & Medicaid Services and Social Security Administration rules. The premium figures below are for 2026; IRMAA thresholds and dollar amounts can change each year. This guide explains the decision mechanics and does not provide individualized tax or Medicare advice. Read Terra’s editorial standards →
Short answer: Medicare premiums are not the same for everyone. If your income is above annual thresholds, Medicare can add an Income-Related Monthly Adjustment Amount (IRMAA) to Part B and Part D. Because the system uses income tiers, crossing a threshold by even a relatively small amount can increase premiums for the year.12
Retirement tax planning should sometimes include Medicare premiums in the same conversation. A Roth conversion, large capital gain or other income event may still be worthwhile, but the decision can look different after you include the potential IRMAA cost.
1. What is IRMAA?
IRMAA is an additional Medicare premium paid by higher-income beneficiaries. It applies to Part B and, for people with Part D prescription-drug coverage, to Part D. It is not a separate income tax; it is an income-related Medicare premium adjustment.1
For 2026, the standard Part B premium is $202.90 per month. Beneficiaries above the first IRMAA threshold pay that standard premium plus an additional Part B amount. Part D IRMAA is added on top of the beneficiary’s prescription-drug plan premium.1
2. The 2026 IRMAA thresholds
| 2026 MAGI | Married filing jointly | Part B total monthly premium | Part D monthly IRMAA* |
|---|---|---|---|
| ≤ $109,000 | ≤ $218,000 | $202.90 | $0 |
| > $109,000 to $137,000 | > $218,000 to $274,000 | $284.10 | $14.50 |
| > $137,000 to $171,000 | > $274,000 to $342,000 | $405.80 | $37.50 |
| > $171,000 to $205,000 | > $342,000 to $410,000 | $527.50 | $60.40 |
| > $205,000 to < $500,000 | > $410,000 to < $750,000 | $649.20 | $83.30 |
| ≥ $500,000 | ≥ $750,000 | $689.90 | $91.00 |
*Part D IRMAA is added to the premium charged by the beneficiary’s Part D plan. Married-filing-separately beneficiaries who lived with a spouse during the year use a different IRMAA table. See the current SSA/CMS rules before making a real decision.12
3. Why the thresholds can feel like a cliff
Consider a single Medicare beneficiary whose 2026 IRMAA is based on MAGI near the first threshold. At or below $109,000, there is no IRMAA. Above $109,000, the 2026 Part B adjustment is $81.20 per month and the Part D adjustment is $14.50 per month.1
This does not mean you should avoid every dollar of income above a threshold. An investment gain, Roth conversion or business decision can create more value than the added premium. It simply means IRMAA belongs in the math.
4. Which year’s income does Medicare use?
SSA generally determines a premium-year IRMAA using tax information from two years earlier. For 2026 premiums, SSA generally uses the beneficiary’s 2024 federal tax return.3
That timing creates a planning issue: a large income event today may not affect Medicare premiums immediately. The impact can show up later, when the older tax return becomes the lookback year.
5. What does “MAGI” mean for IRMAA?
For IRMAA, SSA starts with federal adjusted gross income (AGI) and adds certain tax-exempt interest. Form SSA-44 describes the calculation using AGI plus tax-exempt interest income.3
That is important because “tax-free” does not always mean “invisible to Medicare.” Tax-exempt municipal-bond interest, for example, can still enter the IRMAA MAGI calculation even though it may be exempt from federal income tax.
6. Income events that can matter
Traditional IRA / 401(k) withdrawals
Taxable distributions generally increase AGI and can therefore raise IRMAA MAGI.
Roth conversions
A taxable Roth conversion generally increases ordinary taxable income in the conversion year. That can affect a future IRMAA determination.
Capital gains
Realized capital gains can raise AGI even when they receive favorable capital-gain tax rates.
Tax-exempt interest
Tax-exempt interest is added back for IRMAA MAGI, so it can affect Medicare premiums even when it is not subject to federal income tax.
Pensions and taxable Social Security
Taxable retirement income included in AGI can contribute to the threshold calculation.
Qualified Roth withdrawals
Qualified Roth IRA distributions generally do not enter federal gross income, which can make Roth assets a useful tax-flexibility bucket in retirement.
7. Roth conversions: do not optimize one number
Suppose a retiree is considering a Roth conversion. The conversion can create an ordinary-income tax bill today, reduce a Traditional balance, potentially reduce future required minimum distributions and move money into a Roth account that may provide tax-free qualified withdrawals later.
But if the conversion pushes MAGI across an IRMAA threshold, the near-term cost may include higher Medicare premiums two years later.
That does not make the conversion wrong. It changes the comparison:
| Potential cost today / soon | Potential benefit later |
|---|---|
| Current income tax on conversion | Smaller Traditional balance |
| Possible future IRMAA increase | Potentially lower future RMDs |
| Loss of tax deferral on converted amount | Qualified Roth withdrawals can be tax-free |
| Cash needed to pay conversion tax | More control over future taxable income |
Terra’s principle here is simple: do not optimize a Roth conversion for income tax alone if Medicare premiums are also affected.
8. The same issue can arise with a large capital gain
A retiree may decide to sell appreciated stock, rebalance a concentrated position, sell a second home or realize gains for another good reason. The capital-gain tax rate may look acceptable, but the gain can also increase MAGI enough to create or increase IRMAA.
Again, that is not a reason to avoid realizing gains indefinitely. Concentration risk, investment goals and cash needs can be more important than a premium surcharge. The useful approach is to estimate the whole consequence before acting.
9. Retirement itself can make the lookback misleading
There is an obvious problem with a two-year lookback: many people earn substantially more in the final working years than after they retire. Social Security recognizes this.
If a qualifying life-changing event reduces household income, a beneficiary can ask SSA to use more current information to make a new IRMAA determination. Work stoppage and work reduction are qualifying events, along with certain other events identified by SSA.4
SSA provides Form SSA-44 for this process. Other rules apply to amended returns and corrected IRS data.4
If Medicare says you owe IRMAA based on a high-income working year, but you have since retired or materially reduced work, do not assume the old income must control. Check whether you qualify to request a new determination.
10. A better way to make retirement-income decisions
- Estimate your projected MAGI.Start with expected AGI and remember tax-exempt interest can matter for IRMAA.
- Find your current IRMAA tier.Use the official premium-year thresholds, not an old article or last year’s table.
- Measure the distance to the next tier.This is not a recommendation to stay below it; it tells you whether Medicare premiums are a material variable.
- Model the decision without IRMAA.What is the tax, investment or retirement benefit of the action?
- Add the possible premium effect.Then decide whether the underlying action still makes sense.
- Check whether a life-changing-event appeal applies.Especially after retirement or a major work reduction.
Model retirement income first, then inspect the tax side.
Terra’s Retirement Income & Cash Flow Planner keeps Traditional, Roth and taxable assets separate and can help expose the income decisions that may later affect taxes and Medicare premiums.
11. What this guide does not say
IRMAA planning should not become a game of avoiding income at any cost. A profitable investment sale, a sensible Roth conversion or a needed withdrawal can still be financially beneficial after paying a higher Medicare premium. Thresholds also change over time, and household tax facts can be complicated.
Terra’s goal is narrower: make the premium effect visible so it does not arrive as a surprise.
Primary references
- Centers for Medicare & Medicaid Services — 2026 Medicare Parts A & B Premiums and Deductibles. Official 2026 Part B standard premium, IRMAA thresholds, Part B adjustments and Part D IRMAA amounts. CMS · 2026 Medicare premiums
- Social Security Administration — Medicare Premiums. Current 2026 Part B and prescription-drug income-related premium tables. SSA · Medicare premiums
- Social Security Administration — Form SSA-44. Explains the premium-year lookback and defines IRMAA MAGI using adjusted gross income plus tax-exempt interest. SSA · Form SSA-44
- Social Security Administration — Request to lower an IRMAA. Explains when a beneficiary can request a lower IRMAA after a life-changing event and links to the SSA-44 process. SSA · Lower an IRMAA
Educational information only. Medicare rules, income thresholds, premiums and tax law can change. Confirm the premium year’s official SSA/CMS figures and consult a qualified tax or Medicare professional for decisions where the consequences are material.
Common questions
What is IRMAA?
What income does Medicare use for IRMAA?
Can a Roth conversion increase IRMAA?
Can IRMAA be reduced after retirement?
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