Most retirement tax planning is built around bracket thresholds, where crossing a line costs you a higher rate on the next dollar only. Medicare's income-related monthly adjustment amount does not work that way. IRMAA is a cliff, and the income that pushes you over it was earned two years before the bill arrives.
One Dollar, $81 a Month
In 2026, the standard Medicare Part B premium is $202.90 per month. The first IRMAA tier begins at a modified adjusted gross income above $109,000 for single filers and $218,000 for joint filers.
A retiree whose 2024 MAGI landed at exactly $109,000 pays the standard $202.90. A neighbor who reported $109,001 pays $284.10 — the full first-tier surcharge, not a surcharge on the extra dollar. There is no phase-in. Crossing a boundary moves your entire income into the next tier.
The surcharges scale steeply from there. For 2026, the Part B add-on ranges from $81.20 to $487.00 per month above the standard premium, with tiers topping out at $205,000 for singles and $410,000 for couples. Part D carries its own separate surcharge on the same brackets.
Projections for 2027 point to a standard Part B premium near $218.60, with the first tier starting around $111,000 single and $222,000 joint and rising to roughly $743.20 monthly at the top. Because both spouses pay their own surcharge, a couple in the highest tier can face close to $13,700 per year in IRMAA alone. Those figures are estimates until the Centers for Medicare & Medicaid Services publishes final numbers, typically in the fall.
The Two-Year Lookback Is the Planning Window
Social Security sets your surcharge using the most recent return on file — two years back. Your 2025 return, filed this spring, determines your 2027 premium. That number is already locked.
What is still movable is 2026. The return you file next spring sets your 2028 premium, and there are roughly four and a half months left in the tax year to influence it.
That reframes several year-end decisions. The right size for a Roth conversion is not simply the top of your tax bracket — it is the lower of your bracket ceiling and the next IRMAA threshold. A conversion that saves 2 percentage points of tax while clearing a bracket line by $500 can cost more in Medicare surcharges than it saves. The same math applies to realizing capital gains, taking a lump-sum distribution, or selling a rental property.
What Counts and What Does Not
MAGI for IRMAA includes wages, pensions, IRA and 401(k) withdrawals, RMDs, capital gains, rental income, the taxable portion of Social Security — and tax-exempt municipal bond interest, which surprises retirees who bought munis specifically to keep income down.
Several sources of cash do not count: qualified Roth IRA withdrawals, HSA distributions used for medical expenses, return of cost basis in a taxable brokerage account, and loan proceeds. Retirees with balances across account types can fund a spending year from these while keeping reported income under a threshold.
If Your Income Already Dropped
Surcharges based on a working year you have since left can be appealed with Form SSA-44. But the list of qualifying life-changing events under 20 CFR 418.1205 is closed — eight items: marriage, divorce or annulment, death of a spouse, work stoppage, work reduction, loss of income-producing property, loss of pension income, and an employer settlement tied to bankruptcy or reorganization.
Retirement counts as work stoppage. A bad market year or a large Roth conversion does not.
Practical Takeaways
- Find your 2025 MAGI and check it against the projected 2027 brackets — that premium is set.
- Before any year-end conversion or gain, cap it at the next IRMAA threshold, not the bracket top.
- Remember to count municipal bond interest in the MAGI estimate.
- If you retired or cut hours in 2025 or 2026, file Form SSA-44 rather than waiting two years for the surcharge to correct itself.
- Watch the thresholds each fall; they are inflation-adjusted, and a flat income can still cross a moving line.
Sources: Kiplinger – Medicare Premiums 2026: IRMAA Brackets and Surcharges for Parts B and D; Kiplinger – Projected 2027 IRMAA Brackets and Surcharges for Medicare Part B and D; Bullseye Retirement Planning – 2027 IRMAA Brackets: Complete Medicare Premium Chart; Social Security Administration – Request to Lower an Income-Related Monthly Adjustment Amount (IRMAA); 20 CFR 418.1205 – Life-Changing Events; Income Laboratory – Roth Conversion and IRMAA Planning Guide