Can Social Security benefits be reduced by Medicare premiums or other adjustments when determining taxable amount in 2026?
Executive summary
Social Security benefits are not reduced for federal income-tax calculations by Medicare premiums; instead, the IRS determines taxable Social Security using “combined income” = AGI + nontaxable interest + half of Social Security benefits, and that formula does not subtract Medicare premiums [1] [2]. However, Medicare Part B and some Part D/IRMAA amounts are commonly deducted from monthly checks by SSA, which can lower the net cash a beneficiary receives and therefore blunt the practical effect of a COLA [3] [4].
1. How federal tax on Social Security is actually calculated — the straight statutory rule
The federal tax code (and IRS guidance summarized by tax advisers) measures whether Social Security is taxable by computing “combined income”: adjusted gross income plus nontaxable interest plus one-half of Social Security benefits; if that combined income exceeds fixed thresholds, up to 50% or 85% of benefits becomes taxable [1] [5]. Available sources do not say Medicare premiums are subtracted from AGI or the combined-income formula when determining the taxable portion of benefits [1] [2].
2. Medicare premiums reduce take‑home Social Security checks, but that’s different from taxable income
Centers for Medicare & Medicaid Services (CMS) and SSA materials show that Medicare Part B premiums and some Part D/IRMAA adjustments are frequently deducted directly from benefit checks; that reduces the monthly dollars beneficiaries actually receive but does not change the IRS formula that determines taxable Social Security [3] [6]. Journalists and advocacy groups note this distinction when they say Medicare “eats” part of the COLA — they mean net benefits after deductions, not that premiums lower the amount the IRS treats as taxable [4] [7].
3. 2026 specifics that matter to both taxability and net benefit
SSA announced a 2.8% COLA for 2026 and CMS set the standard Part B premium at $202.90 for 2026; many beneficiaries will see that premium automatically deducted from their Social Security checks, which can materially shrink the effective COLA they feel in their bank accounts [8] [3]. Coverage of the 2026 changes calculates that for an average retired-worker benefit the $17.90 Part B increase trims the headline COLA by a significant share — a cash flow effect distinct from federal tax treatment [4] [9].
4. High‑income surcharges and SSA deductions — where tax and deductions interact
For higher‑income Medicare enrollees, income‑related monthly adjustment amounts (IRMAA) for Part D and higher Part B tiers are determined from IRS return data and are routinely deducted from Social Security checks [3] [6]. SSA’s guidance makes clear that such extra premium amounts are collected via SSA deductions, and SSA uses IRS income information to calculate them, but the sources do not state that those deducted premiums themselves reduce the IRS combined‑income calculation that determines how much of Social Security is taxable [6] [3].
5. State taxes and other nuances — what the sources mention and what they don’t
State treatment varies: several stories and state guidance note that states increasingly exempt Social Security or offer deductions, so net taxation at the state level can change independently of federal rules [2] [5]. Available sources do not discuss any 2026 federal change that would allow Medicare premiums (Part B, Part D, or IRMAA) to be subtracted when computing federal taxable Social Security; if readers want to claim deductions on their federal returns for Medicare premiums, current reporting in these sources does not describe such a change [1] [3].
6. Practical takeaway for beneficiaries and planners
If your concern is whether paying Medicare premiums will lower the federal taxable portion of Social Security benefits, current reporting shows the answer is no: premiums reduce your net check but not the IRS combined‑income base used to compute the taxable share [1] [6]. If your concern is cash flow, expect Part B, Part D and IRMAA withholdings to blunt the 2026 COLA for many — SSA and CMS materials and news coverage document that effect [8] [4].
Limitations and advice on next steps: these conclusions reflect the materials provided, which cover SSA, CMS and major press summaries for 2026; they do not include any unpublished IRS rule changes or private tax‑software behavior not reported here — available sources do not mention any new federal rule that subtracts Medicare premiums from the combined‑income calculation for Social Security tax purposes [1] [3]. If you need personalized tax planning, consult a tax professional and review your SSA benefit notice and IRS guidance for any updates specific to your filings [8] [1].