What Income Actually Counts Toward the Medicare IRMAA Thresholds?

IRMAA is not a tax bracket. It is a cliff. Cross a threshold by one dollar and the surcharge for the whole year steps up — which makes the question of exactly which dollars count unusually consequential.

The short answer: The IRMAA income thresholds are measured against modified adjusted gross income, which the Social Security Administration defines as your total adjusted gross income plus tax-exempt interest income, taken from the tax return you filed two years earlier.

How does SSA define income for IRMAA?

SSA states it plainly: “Your MAGI is your total adjusted gross income and tax-exempt interest income.”

Two things follow. This is AGI — the bottom line of the front page of your return — not taxable income, so deductions taken below the AGI line do not reduce it. And tax-exempt interest is added back, which surprises people who bought municipal bonds precisely because the interest was not taxable.

For 2026 the first IRMAA income thresholds sit at MAGI above $109,000 for an individual and above $218,000 for a couple filing jointly. Below them you pay the standard Part B premium of $202.90 a month. Just above, Part B becomes the standard premium plus $81.20, and the Part D adjustment adds $14.50 to your plan premium.

Which income counts toward the IRMAA income thresholds?

Anything that lands in adjusted gross income, plus tax-exempt interest. For a federal retiree, that typically means:

• Your FERS or CSRS annuity, in full.
• Traditional TSP withdrawals, including required minimum distributions.
• Roth conversions — the converted amount is ordinary income in the conversion year.
• The taxable portion of Social Security benefits.
• Capital gains, including a one-time gain from selling a rental property or a concentrated stock position.
• Tax-exempt interest, added back by statute even though it is not taxed.

What does not count: qualified Roth distributions, the return of your own after-tax contributions, and anything that never enters AGI. The item people most expect to help and which does not is itemized medical expenses — those sit below the AGI line, so they can cut your tax bill substantially while leaving your MAGI, and your IRMAA tier, untouched.

Why is the figure two years old?

Because SSA uses the most recent federal tax return the IRS has provided. SSA states that to determine 2026 adjustments, “generally, this information is from a tax return filed in 2025 for tax year 2024.”

That two-year lookback is why the IRMAA income thresholds so often catch people in their first years of retirement. The 2026 determination reflects 2024 — a year in which many new retirees were still drawing a full federal salary, and some also took a lump-sum annual leave payout in the same tax year.

What if your income has since dropped?

SSA will consider a new decision if a qualifying life-changing event caused the drop. SSA lists marriage, divorce, or the death of a spouse; you or your spouse stopping work or reducing hours; loss of income-producing property beyond your control; a scheduled cessation, termination, or reorganization of an employer’s pension plan; and a settlement from an employer because of closure, bankruptcy, or reorganization.

Retirement itself is on that list, under stopping work. The request goes on Form SSA-44 with documentation. If you instead believe the determination is simply wrong, that is an appeal — Form SSA-561-U2, or online.

Key takeaways

• SSA defines MAGI for IRMAA as adjusted gross income plus tax-exempt interest (source: SSA).
• The 2026 first thresholds are $109,000 individual and $218,000 joint, against a standard Part B premium of $202.90 (source: SSA).
• The determination uses the return from two years earlier — 2026 generally uses tax year 2024 (source: SSA).
• Itemized medical deductions do not lower MAGI, because they sit below the AGI line.
• A qualifying life-changing event, including stopping work, can be reported on Form SSA-44 (source: SSA).

Frequently asked questions

Does each spouse pay separately?
Both spouses’ income counts toward the joint threshold, and if both are enrolled, each pays a surcharge on their own premium.

Do Roth conversions count?
Yes, in the year of conversion. That interaction is covered in our post on TSP in-plan Roth conversions.

Is IRMAA the same as the Part B late enrollment penalty?
No. They are separate charges and it is possible to owe both. See the Part B penalty.

The tier is set two years before it lands

Which means the years that shape it are the ones around your retirement date. Fed Pilot’s free federal retirement workshops cover IRMAA alongside TSP withdrawal timing and Medicare coordination. Register for an upcoming workshop.