How Is IRMAA Calculated?

What counts as MAGI

For IRMAA, your MAGI is your adjusted gross income (AGI) plus any tax-exempt interest, most commonly interest from municipal bonds. Everything that flows into AGI counts: wages, self-employment income, taxable Social Security, pensions, IRA and 401(k) withdrawals, capital gains, dividends, and interest. Because tax-exempt interest is added back, even income that escapes federal tax can still push you into a higher IRMAA tier.

The two-year lookback

Social Security uses the most recent tax return the IRS has on file, which runs two years behind the premium year. So your 2027 IRMAA brackets are based on your 2025 income. The table below shows which income year sets each premium year.

The cliff effect

IRMAA brackets are cliffs, not a gradual phase-in. Once your MAGI crosses a threshold by even one dollar, your entire surcharge jumps to the next tier for the whole year. There is no partial surcharge for being barely over the line, which is why people near a bracket watch their income closely.

A worked example

Suppose you are a single filer looking at your 2026 premium. Medicare uses your 2024 MAGI. Say that MAGI was $140,000. For 2026, the single brackets are: standard up to $109,000; Tier 1 from $109,001; Tier 2 from $137,001; Tier 3 from $171,001, and so on. Because $140,000 falls between $137,001 and $171,000, you land in Tier 2, so a Tier 2 surcharge is added to both your Part B and Part D premiums for all of 2026.

Common questions

What income is used for 2027 IRMAA?

Your 2027 IRMAA brackets are based on your 2025 income. Because of the two-year lookback, Medicare uses the MAGI from the tax return filed two years before the premium year.

What is MAGI for IRMAA?

For IRMAA, MAGI is your adjusted gross income (AGI) plus any tax-exempt interest, such as municipal bond interest. It is not the same MAGI definition used for other tax purposes.

Who calculates my IRMAA?

Social Security calculates your IRMAA using income data it receives from the IRS, then notifies you of any surcharge. The amount is added automatically to your Part B and Part D premiums.

Does crossing a bracket by $1 matter?

Yes. IRMAA brackets are cliffs, not a sliding scale. Going a single dollar over a threshold moves your entire surcharge up to the next tier for the whole year.