Which income sources are added back to AGI to compute MAGI for Medicare IRMAA?
Executive summary
Medicare’s IRMAA uses a Modified Adjusted Gross Income (MAGI) that is your federal adjusted gross income (AGI) plus tax‑exempt interest (non‑taxable municipal bond interest) to determine surcharges (lookback is two years) [1] [2]. Multiple financial advisers and Medicare guides repeat the same rule: MAGI for IRMAA = AGI + tax‑exempt interest, and the Social Security Administration applies that figure from tax returns two years earlier when setting Part B and Part D surcharges [1] [3] [4].
1. What “adds back” to AGI for IRMAA: the simple rule
For Medicare IRMAA purposes, MAGI is calculated by taking the taxpayer’s AGI and adding back tax‑exempt interest (most commonly municipal bond interest reported on Form 1040, line 2a) — that is the addition repeatedly cited in practitioner and media explainers [1] [5]. Multiple sources state this same, narrow construction: AGI + any tax‑exempt interest equals the MAGI the SSA uses for IRMAA [1] [5].
2. What beneficiaries should expect about timing and source documents
The SSA bases IRMAA on the MAGI shown on your tax return from two years prior (for example, 2025 IRMAA typically uses 2023 MAGI); SSA usually obtains this figure via IRS data exchanges and issues determinations in late year notices [4] [3] [1]. Practitioners and university tax schools highlight that planning moves such as Roth conversions or taxable events in the lookback year can raise AGI and thus MAGI, potentially triggering higher IRMAA until MAGI falls in a later year [6].
3. Common misunderstandings and what sources dispute
Several sources explicitly note what does not get added: non‑taxable Social Security benefits are not included in MAGI for IRMAA (contrary to some public confusion) — that omission is pointed out by at least one consumer health article and advisory pieces [2] [7]. Other outlets emphasize that distributions from Roth accounts do not increase MAGI for IRMAA purposes when they are qualified tax‑free distributions [8].
4. Tax‑planning implications cited by advisers
Tax professionals and wealth managers repeatedly flag that “one‑off” income increases in the lookback year — e.g., Roth conversions, capital gains, sale of a business, large IRA distributions — can push a beneficiary into IRMAA tiers because those items raise AGI (and thus MAGI when combined with tax‑exempt interest) [6] [8]. Some advisories recommend pairing non‑qualifying events with qualifying life‑changing events and using Form SSA‑44 to request a redetermination when income will materially decline in the current year [6] [8].
5. How consistent are the public explanations — and where coverage is thin
The sources provided show strong consistency: most financial commentators and Medicare how‑to guides state MAGI for IRMAA = AGI + tax‑exempt interest [1] [5] [3]. Official SSA procedural manuals (POMS) exist and are cited by some outlets as the authoritative procedure for calculation and appeals, but the specific POMS text in the search results is only referenced by title here; details in that primary SSA guidance are “not found in current reporting” among the provided snippets [9]. If you need absolute legal wording or the exhaustive list of what the SSA considers tax‑exempt interest categories, consult SSA/CMS official notices or the IRS‑SSA data‑exchange guidance directly — current reporter summaries point to those primary sources as governing [9] [10].
6. Practical next steps for readers worried about IRMAA
Check your AGI and tax‑exempt interest on the tax return two years prior to the premium year to estimate IRMAA exposure [3] [4]. If income in the lookback year was unusually high, consider the SSA appeals/redetermination process (Form SSA‑44) when you experience qualifying life‑changing events; discuss timing of Roth conversions, capital‑gain realization, or charitable strategies with a tax advisor because these moves can affect AGI [6] [8].
Limitations: the materials provided are predominantly advisor and consumer guides and repeat a common summary (AGI + tax‑exempt interest). The official SSA/CMS notices and full POMS text govern disputes and precise administrative procedures and are only referenced here [9] [10]; confirm any contested or high‑stakes interpretation against those primary sources.