Don’t make the mistake of ingoring IRMAA and medicare surcharge minimization as part of your tax planning on your retirement income.
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For high-income Americans, Medicare is not automatically the low-cost retirement benefit many people expect. Successful executives, business owners, physicians, attorneys, entertainers, and retirees with large investment portfolios can all face higher Medicare premiums because of the income-related monthly adjustment amount, better known as IRMAA.
As a Certified Financial Planner, I often see affluent retirees caught off guard by Medicare surcharges because they assume Medicare planning is separate from tax planning. It is not. Most had no idea that Medicare premiums were income based. A single year of higher income from stock options, a business sale, real estate gains, required minimum distributions, or a large Roth conversion can increase Medicare premiums later, even after your working income has dropped.
For 2026, Medicare uses a two-year look-back period. That means your 2026 Medicare premiums are generally based on your 2024 modified adjusted gross income, or MAGI. If you had a high-income year because you were still working, sold appreciated investments, exercised stock options, completed a large Roth conversion, or sold real estate, you may pay more for Medicare even if your current income is lower.
For wealthy households, IRMAA is rarely the largest retirement expense. The bigger issue is what it signals: your retirement income plan may be creating avoidable taxes, higher Medicare premiums, and less flexibility than necessary. If you have spent decades building wealth, it is worth taking the time to make sure your withdrawal strategy is not quietly increasing costs year after year.
What Is IRMAA?
IRMAA is a Medicare surcharge for higher-income beneficiaries. It applies to Medicare Part B and Medicare Part D premiums and is based on your tax filing status and MAGI from two years earlier. In plain English, IRMAA is a wealth tax by another name for retirees with substantial taxable income.
When you start Medicare, the Social Security Administration sends an initial determination notice if it believes you owe IRMAA. This notice explains the surcharge and how to request a new determination if you experienced a qualifying life-changing event, such as retirement, work reduction, marriage, divorce, death of a spouse, or loss of certain income-producing property. When going it alone for your retirement planning, it is common to ignore or miss the letter and thereby overpay your Medicare premiums.
IRMAA is not a one-time penalty. It is added to your monthly Medicare Part B premium and to your Medicare Part D prescription drug plan premium. For married couples where both spouses are on Medicare, the surcharge can apply to each spouse. Over a long retirement, these extra premiums can add up to tens of thousands of dollars that could have remained invested, been spent on travel, or supported your family and favorite charities. Would you rather take a family vacation or pay more in Medicare premiums?
2026 IRMAA Brackets For Medicare Part B And Part D
For 2026, the standard Medicare Part B premium is $202.90 per month. Higher-income beneficiaries pay more based on 2024 MAGI. Part D IRMAA is added on top of your prescription drug plan premium.
If your 2024 MAGI was $109,000 or less as a single filer, or $218,000 or less for married filing jointly, you will generally pay the standard 2026 Part B premium of $202.90 per month and no Part D IRMAA.
For single taxpayers with 2024 MAGI greater than $109,000 and less than or equal to $137,000, or joint filers greater than $218,000 and less than or equal to $274,000, the 2026 Part B premium is $284.10 per month. The Part D IRMAA is $14.50 per month, plus your plan premium.
For single taxpayers with 2024 MAGI greater than $137,000 and less than or equal to $171,000, or joint filers greater than $274,000 and less than or equal to $342,000, the 2026 Part B premium is $405.80 per month. The Part D IRMAA is $37.50 per month, plus your plan premium.
For single taxpayers with 2024 MAGI greater than $171,000 and less than or equal to $205,000, or joint filers greater than $342,000 and less than or equal to $410,000, the 2026 Part B premium is $527.50 per month. The Part D IRMAA is $60.40 per month, plus your plan premium.
For single taxpayers with 2024 MAGI greater than $205,000 and less than $500,000, or joint filers greater than $410,000 and less than $750,000, the 2026 Part B premium is $649.20 per month. The Part D IRMAA is $83.30 per month, plus your plan premium. For single taxpayers with MAGI of $500,000 or more, or joint filers with MAGI of $750,000 or more, the 2026 Part B premium is $689.90 per month. The Part D IRMAA is $91.00 per month, plus your plan premium.
One important planning point: IRMAA brackets work like cliffs. Being just one dollar over a threshold can move you into the next premium tier for the year. This is why tax planning before and during retirement can be so valuable.
This is especially important for high earners approaching retirement. Selling a concentrated stock position, exercising equity compensation, taking a large bonus, selling a practice, or completing a Roth conversion without coordinating the tax impact can push you into a higher IRMAA tier. The Medicare surcharge may not be the only reason to adjust your plan, but it is one more reason not to make major financial decisions in isolation.
How To Reduce Medicare IRMAA Surcharges In 2026
If your income has dropped since the tax year Medicare is using, you may be able to request a new IRMAA determination. This can be particularly valuable for high-income professionals who retire, sell a business, step away from partnership income, reduce consulting work, or lose a spouse after a high-tax year.
You can inform Medicare of your new income by submitting Form SSA-44, “Medicare Income-Related Monthly Adjustment Amount Life-Changing Event,” to the Social Security office. Work stoppage and work reduction may qualify, as can marriage, divorce, annulment, death of a spouse, loss of pension income, or certain losses of income-producing property.
Skipping this step after a qualifying life-changing event could cost you thousands of dollars in extra Medicare premiums for no additional benefit. However, not every income spike qualifies for relief. A voluntary Roth conversion, large capital gain, bonus, business sale, deferred compensation payout, or equity compensation event may still count toward MAGI for IRMAA purposes.
If you expect your income to remain high in retirement, do not wait until you are already paying IRMAA to start planning. For 2026, employee 401(k) contributions can reduce taxable income by up to $24,500, with an additional $8,000 catch-up contribution for those age 50 and older. Higher catch-up limits may also apply for certain workers ages 60 through 63, depending on the retirement plan. Business owners and self-employed professionals may have even more powerful options through cash balance plans, defined benefit plans, profit-sharing plans, or customized retirement plan design.
Health savings accounts, Roth IRAs, Roth 401(k)s, tax-loss harvesting, charitable giving strategies, donor-advised funds, and taxable account withdrawal planning can all help create more tax flexibility in retirement. Roth conversions before Medicare age may increase taxable income now, but they can potentially reduce future required minimum distributions and future IRMAA exposure. If you are age 70½ or older, qualified charitable distributions from an IRA may also help reduce taxable income while supporting charities you care about.
The takeaway: Medicare premium planning is tax planning, investment planning, and retirement income planning. Work with a tax-planning-focused Certified Financial Planner to coordinate retirement income, Roth conversions, charitable giving, capital gains, business income, equity compensation, and Social Security decisions. The right strategy may help you reduce lifetime taxes, preserve more of your wealth, and avoid overpaying for Medicare as you age.
