You’ve spent decades planning, saving, and investing diligently. Now, on the cusp of retirement, you’re confronted with a penalty for your success: the Income-Related Monthly Adjustment Amount, or IRMAA. It’s a surcharge on your Medicare Part B and D premiums, and the anxiety it produces is palpable. You’re worried about this unknown future cost eating away at your hard-earned nest egg.
Let me be direct: It’s time to stop feeling anxious and start being strategic.
The widespread myth is that IRMAA is a problem you deal with in retirement. This is wrong.
IRMAA is a direct result of your tax return from two years prior. Your 2026 Medicare premium isn’t a future problem; it’s a number being written in pen on your 2024 tax return. This is the key to shifting from a position of fear to one of absolute control.
Key Takeaways Ahead
The IRMAA Time Machine: Why Your 2024 Tax Return Controls Your 2026 Medicare Premiums
The Social Security Administration (SSA) doesn’t guess your retirement income. To determine your IRMAA, they use a simple but powerful mechanism: a 2-year lookback. They pull your tax return from two years ago, find your MAGI, and use that number to set your premiums today.
This isn’t a bureaucratic quirk; it’s a planning opportunity. It’s a time machine that lets you see the direct consequences of your current actions two years into the future.
This is why you must shift your mindset from reactive tax filing to Proactive MAGI Budgeting. Instead of just trying to get the lowest tax bill for 2024, the goal is to manage your income to land precisely where you want to be for your first, critical years of Medicare.
- Source: Social Security Administration, https://www.cms.gov/newsroom/fact-sheets/2025-medicare-parts-b-premiums-and-deductibles
- Learn more about How They Calculate Your IRMAA Surcharge
💡 Michael Ryan Money Tip: Verify Your Source
The specific calculation methodology (Line 11 + Line 2a) is the official, verifiable formula directly sourced from the Social Security Administration’s Program Operations Manual System (POMS HI 01101.010).
The 2026 IRMAA Brackets: The Numbers You Need to Target
The government has not yet released the official 2026 IRMAA brackets. However, they are based on the 2024 tax year, so we can use the 2024 MAGI thresholds as a very close projection. Think of these not as future penalties, but as the boundaries on the field. Your job in 2024 is to land the ball exactly where you want it.
Projected 2026 IRMAA Brackets (Based on 2024 MAGI, Filed in 2025)
| 2024 MAGI (Individual) | 2024 MAGI (Joint) | Projected Part B Monthly Premium |
|---|---|---|
| ≤ $103,000 | ≤ $206,000 | ~$174.70 (Standard Premium) |
| > $103,000 and ≤ $129,000 | > $206,000 and ≤ $258,000 | ~$244.60 |
| > $129,000 and ≤ $161,000 | > $258,000 and ≤ $322,000 | ~$349.40 |
| > $161,000 and ≤ $193,000 | > $322,000 and ≤ $386,000 | ~$454.20 |
| > $193,000 and < $500,000 | > $386,000 and < $750,000 | ~$559.00 |
| ≥ $500,000 | ≥ $750,000 | ~$594.00 |
Source: Official 2024 thresholds from Medicare.gov. The 2026 brackets will likely be adjusted slightly for inflation, but these are the numbers that should guide your 2024 planning.
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Case Study: How a Proactive Engineer Saved $15,000 in Future Premiums
Let me tell you about a client, a sharp engineer named David. He was set to retire at 65 and knew his final two years of work would include a large bonus and the sale of significant company stock. A reactive approach would have sent his MAGI skyrocketing, triggering a massive IRMAA surcharge for his first few years on Medicare.
Instead, we built a proactive “income runway.” Here’s what his planning looked like:
| Year (Age) | Income Event | Action Taken | Resulting 2024 MAGI |
|---|---|---|---|
| 2023 (63) | Final Year Bonus | Deferred a portion of his bonus payout to January 2024. | Kept MAGI low. |
| 2024 (64) | Stock Option Sale & Bonus | Sold half the stock, took the deferred bonus, and executed a strategic Roth conversion up to the $258,000 MAGI limit. | $257,500 |
| 2025 (65) | Retirement & Final Stock Sale | Sold the remaining stock. His income was lower as he was now retired. | Lower MAGI. |
By strategically spreading his income events across 2024 and 2025, David’s 2024 MAGI landed him in the second IRMAA tier, not the fourth or fifth. This single act of proactive planning saved him over $4,000 on his 2026 premiums alone and is projected to save him over $15,000 during his first three years of retirement. He didn’t avoid IRMAA entirely; he controlled it.
Your 2025 IRMAA Action Plan: A Checklist for Pre-Retirees
Before December 31, 2025, sit down and review these controllable components of your financial life.
Your 2025 IRMAA Action Plan
A Checklist for Pre-Retirees
The Michael Ryan Money Bottom Line
Stop thinking of IRMAA as a future penalty. It is a direct, predictable consequence of the choices you are making with your income today. By understanding the 2-year lookback and proactively managing your MAGI, you can take control of this cost, smooth your entry into retirement, and keep thousands of dollars where they belong.
In your pocket.
Frequent Readers’ Questions
What exactly is the 2-year lookback for IRMAA?
It is the mechanism the Social Security Administration uses to set your Medicare premiums. They use the Modified Adjusted Gross Income (MAGI) from your tax return filed two years ago to determine if you need to pay a higher premium this year. For example, your 2026 premiums are based on your 2024 MAGI.
How can I appeal an IRMAA determination?
You can appeal if you’ve had a “Life-Changing Event” (LCE) that has significantly lowered your income since the MAGI year on record. Common LCEs include retirement, death of a spouse, divorce, or loss of a pension. You must file Form SSA-44, “Application for Reconsideration,” with the Social Security Administration, providing proof of the event and your new, lower income.
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Note: The content provided in this article is for informational purposes only and should not be considered as financial or legal advice. Consult with a professional advisor or accountant for personalized guidance.
