Income tested for a 2026 Medicare premium was earned two years ago. The return that sets the charge was filed in 2025 for tax year 2024, which means the paycheck, the capital gain, or the one-time retirement account withdrawal that raises a premium this year is already history by the time the bill arrives. The surcharge system is built on that lag, and it explains why a retiree living on far less than the tested figure can still be charged as though the higher income were current.
The premium is scored on a return filed two years earlier
Medicare’s income-related monthly adjustment amount, usually shortened to IRMAA, is not calculated from what a beneficiary earns during the coverage year. It is calculated from the modified adjusted gross income reported on the federal tax return from two years earlier, and Medicare’s cost tables label the columns accordingly, pairing yearly income in 2024 with what is paid each month in 2026.
The Social Security Administration describes the mechanics in its guidance on Medicare premiums, stating that the determination uses the most recent federal tax return the IRS provides, generally a return filed in 2025 for tax year 2024. It also notes an older fallback: “Sometimes, the IRS only provides information from a return filed in 2024 for tax year 2023.”
The practical result is that a single high-income year echoes into a premium two years later. Selling a property, converting a traditional retirement account to a Roth, or receiving a lump-sum payout in 2024 can push a 2026 premium up a step or several, long after the money has been spent or reinvested.
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Six steps between $202.90 and $689.90
The standard 2026 Part B premium is $202.90 a month, up $17.90 from $185.00 in 2025, and the annual Part B deductible is $283, up $26 from $257. Most beneficiaries pay the standard amount and stop there. The surcharge ladder published in the 2026 Medicare Part B fact sheet has six rungs, and crossing the first threshold lands on the first one, not the last.
- $109,000 or less as an individual, $218,000 or less filing jointly: no adjustment, $202.90 a month.
- Above $109,000 up to $137,000, or above $218,000 up to $274,000: an $81.20 adjustment, $284.10 a month.
- Above $137,000 up to $171,000, or above $274,000 up to $342,000: a $202.90 adjustment, $405.80 a month.
- Above $171,000 up to $205,000, or above $342,000 up to $410,000: a $324.60 adjustment, $527.50 a month.
- Above $205,000 and under $500,000, or above $410,000 and under $750,000: a $446.30 adjustment, $649.20 a month.
- $500,000 or more, or $750,000 or more filing jointly: a $487.00 adjustment, $689.90 a month.
A household one dollar over the first threshold pays $284.10 a month, not $689.90. The top figure requires a modified adjusted gross income of at least half a million dollars for an individual filer, and the surcharge at that level runs $487.00 a month, or $5,844 a year above the standard premium.
The thresholds are cliffs, not phase-ins
Income tax brackets apply a higher rate only to the dollars above a line. IRMAA does not work that way. Crossing a threshold by any margin moves a beneficiary onto the full adjustment for that bracket, so a single dollar of additional income can add $81.20 a month, and a dollar at a higher rung can add considerably more.
That cliff structure is what makes year-end income decisions consequential for anyone near a line. A modest withdrawal taken in December rather than January, or a mutual fund distribution that arrives unplanned, is capable of moving a full step. The charge also applies per person, so a married couple where both are enrolled in Part B each pay the bracket amount rather than splitting one.
Tax-exempt interest counts toward the income being measured
The figure being tested is not adjusted gross income alone. Social Security defines the modified adjusted gross income used for this purpose as total adjusted gross income plus tax-exempt interest income, which means municipal bond interest counts toward a Medicare premium even though it is not taxed.
This catches retirees who built a portfolio specifically around tax-free income. Municipal bonds keep the interest off a tax bill, but they do not keep it out of the IRMAA calculation, and a portfolio designed to minimize income taxes can still push a beneficiary into a higher premium bracket. The same addition applies to a couple filing jointly, measured against the joint thresholds.
Part D carries a second surcharge, and Social Security issues the determination
The Part B ladder is not the only one. The same brackets trigger a Part D income-related adjustment, added on top of whatever an enrollee’s own drug plan charges, at $0.00, $14.50, $37.50, $60.40, $83.30, and $91.00 a month for 2026. A high-income beneficiary is therefore charged twice, once against the Part B premium and once against the Part D premium.
The determination itself comes from the Social Security Administration rather than from Medicare, which is why the notice arrives on Social Security letterhead and why a request for reconsideration goes there. CMS notes in its own summary of the program that “Since 2007, a beneficiary’s Part B monthly premium has been based on his or her income,” and that these adjustments “affect roughly 8% of people with Medicare Part B.” The published 2026 Medicare costs booklet carries the same brackets in table form, headed by the income reported for 2024.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources; where a claim could not be verified from the public record, we say so.
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