The 2026 Medicare Surcharge Is Set by Your 2024 Income: IRMAA and the Two-Year Lookback

Your 2026 Medicare Part B and Part D premiums are set by your 2024 tax return. Medicare uses your modified adjusted gross income from two years prior. In 2026, income above $109,000 single or $218,000 joint triggers a surcharge called IRMAA, and one dollar over a threshold owes the whole tier.

The return that sets your 2026 premium was filed a year ago

Here is the part that surprises most people turning 65. The income that decides your 2026 Medicare cost is already locked. It was reported on a return you filed in 2025.

Medicare reads your modified adjusted gross income, which is your adjusted gross income plus any tax-exempt interest, from the return two years back. For 2026, that is your 2024 return. Medicare.gov describes the Income-Related Monthly Adjustment Amount, or IRMAA, as an extra amount added to your premium when that two-year-old MAGI sits above a set threshold.

This is not new policy. As the Centers for Medicare & Medicaid Services put it in its 2026 premium fact sheet, “Since 2007, a beneficiary’s Part B monthly premium has been based on his or her income.” What changes each year is where the thresholds land.

IRMAA is a cliff, not a slope

Most tax rules phase in. IRMAA does not. Cross a threshold by a single dollar and you owe the entire tier’s surcharge for all twelve months of the year.

Run the entry cliff for a single filer in 2026. At $109,000 of MAGI you pay the standard Part B premium of $202.90 and no Part D surcharge. At $109,001, one dollar more, Part B jumps to $284.10 and Part D adds $14.50. That one dollar costs $95.70 a month, or $1,148.40 across the year, and none of it phases in.

Keep in mind the surcharge sits on top of both parts. It is added to Part B and to Part D separately, so a reader watching only the Part B number understates the total.

The 2026 IRMAA brackets

The thresholds below are set against your 2024 MAGI. IRMAA begins at $109,000 for individuals and $218,000 for couples filing jointly, and it tops out at $500,000 single or $750,000 joint. At the top tier, the Part B premium reaches $689.90 a month, a surcharge of $487.00 over the standard amount, and Part D adds $91.00.

2026 Medicare IRMAA tiers, set by 2024 MAGI. Source: Centers for Medicare & Medicaid Services, “2026 Medicare Parts A & B Premiums and Deductibles,” Nov. 14, 2025.

These are per-person figures. A married couple who both enroll can each land in a tier, so a joint MAGI over a threshold is charged twice.

The moves that quietly push a high earner over a cliff

For a San Diego professional inside the last five years before retirement, MAGI stops being a steady salary number and starts jumping. Four ordinary moves are the usual culprits, and each one is a decision, not an accident.

First, a large Roth conversion. Converting is often the right long-term call, but every converted dollar is ordinary income in the year you convert, and it counts toward the MAGI that sets your premium two years later.

Second, realizing capital gains. A concentrated-stock sale to de-risk a position, or an RSU vest, lands in MAGI the same year. A biotech or tech professional trimming a single-stock overweight can clear a bracket without touching their salary.

Third, the first RMD year. Required distributions are income you cannot decline once they start, and the first one can be the largest tax event of a saver’s life if the pre-tax balance grew untouched.

Fourth, a one-time bonus or a deferred-comp payout. A lump-sum distribution or a final incentive check can push a single year far above the income you actually live on.

One composite from our files makes the timing cost concrete. A client let the low-income years between the last paycheck and the first required distribution pass without drawing on the pre-tax account. The balance kept compounding. The distributions that are now required run larger than the income actually needed, and they are not welcome. Another set of clients, in their seventies, take required distributions that run past what they spend. Every dollar of that overshoot still counts in the MAGI that prices their Medicare two years on. Whether to use those quiet years is itself a decision with a cost, the same tradeoff that runs through how you decide between a lump sum and an annuity.

The lever you still control

Two things are true at once here. First, 2024 income is locked, so your 2026 premium is settled. Second, the income you realize now, in 2026, sets your 2028 surcharge. That later year is the one still open.

This is where the calendar matters. Medicare open enrollment runs October 15 to December 7, which is when you confirm your Part D and Advantage coverage for the year. Separately, any move that changes your 2026 MAGI, a conversion, a sale, a distribution, has to be done by December 31. After that the year is closed the same way 2024 already is.

None of this argues for avoiding a conversion or a sale. It argues for sizing it on purpose. A high earner mapping the last decade before retirement is really coordinating brackets across several years at once, which is the work behind the San Diego high-earner strategy. Confirm the timing of any large realization with your CPA and advisor before the calendar closes it, not after. If you want to walk through how a conversion or a stock sale would land against these brackets, you can book a time to talk it through.

If a life-changing event already dropped your income

The two-year lookback assumes the old return still describes you. Sometimes it does not. If you retired, a spouse died, you divorced, or you lost an income-producing property, your current income can be far below what 2024 shows.

For those cases, Social Security lets you ask for a new decision. You file Form SSA-44, the life-changing event form, with the Social Security Administration and provide proof of the reduced income. If it is accepted, the premium reflects what you make now rather than the two-year-old figure. Retiring is a qualifying event, so the year you stop working is a common time to file.

Where a high earner has the most room is earlier, in the years the income is still theirs to time. Mapping those years against the brackets is the core of the ten-year retirement window, and it is where a complimentary review earns its keep. The review happens whether or not you decide to change anything.

Frequently asked questions

Why does my 2026 Medicare premium depend on my 2024 income?

Medicare sets IRMAA using your modified adjusted gross income from the tax return two years earlier. For 2026, that is your 2024 return. The 2024 figure is already locked, so your 2026 Part B and Part D surcharge is settled.

What counts as income for IRMAA?

IRMAA uses modified adjusted gross income, which is your adjusted gross income plus any tax-exempt interest. That includes Roth conversions, realized capital gains, RSU vests, required distributions, and deferred-comp payouts, not just salary.

Is IRMAA a one-time charge or permanent?

IRMAA is set one year at a time and recalculated each year against the MAGI from two years prior. A single high-income year raises the surcharge for that year, then it resets when the two-year-old income falls back below the threshold.

How much does crossing one bracket cost in 2026?

For a single filer, going from $109,000 to $109,001 of 2024 MAGI moves Part B from $202.90 to $284.10 and adds $14.50 in Part D. That one dollar of income costs $95.70 a month, or $1,148.40 across 2026.

Can I appeal IRMAA if I just retired?

Yes. If a life-changing event such as retirement, divorce, the death of a spouse, or the loss of income-producing property reduced your income, you can file Form SSA-44 with the Social Security Administration so the premium reflects your current income instead of the two-year-old return.