How are IRMAA brackets determined and which income types count for 2025?
Executive summary
IRMAA (Income-Related Monthly Adjustment Amount) surcharges for Medicare Parts B and D are calculated from your Modified Adjusted Gross Income (MAGI) reported two years earlier — so 2025 IRMAA is based on 2023 tax returns — and affect roughly 7–8% of Medicare enrollees, with the first threshold at $106,000 for individuals and $212,000 for joint filers in 2025 (MAGI rules and thresholds from Social Security/CMS and reporting outlets) [1] [2] [3].
1. How IRMAA brackets are set: the two‑year lookback and the agency roles
IRMAA isn’t set by your Medicare plan or insurer; the Social Security Administration (SSA) uses IRS tax data — specifically MAGI from two years prior — to determine whether you pay the surcharge, and CMS publishes the premium and deductible amounts that incorporate those surcharges for the year (for 2025 the SSA relied on 2023 income) [1] [2] [4].
2. What “MAGI” for IRMAA means in practice
For IRMAA the SSA defines MAGI as your adjusted gross income (AGI) plus certain tax‑exempt income; in effect, IRMAA calculations begin with IRS AGI figures from the tax year used and then add tax‑exempt items the SSA includes — the exact line items SSA treats as MAGI are documented by SSA guidance and Form SSA‑44 instructions [4].
3. 2025 thresholds and who is likely affected
For 2025 the commonly reported thresholds start at $106,000 for individual filers and $212,000 for joint filers; beneficiaries above those levels face surcharges that rise across multiple brackets — resources show a sliding scale with top brackets reaching into the high hundreds of thousands for individuals and couples [2] [5] [3].
4. How much IRMAA adds to your premiums
CMS and reporting outlets note that IRMAA adds to the standard Part B and Part D premiums on a sliding scale; for 2025 the standard Part B premium is $185, and total premiums for high‑income enrollees can range substantially higher depending on bracket — several outlets show Part B increases up to several hundred dollars and Part D surcharges up to the amounts set by CMS for that year [6] [7] [2].
5. Income types that count (and where reporting is sparse)
Available sources consistently say IRMAA is based on MAGI — AGI plus certain tax‑exempt income — but the supplied documents do not list a comprehensive line‑by‑line breakdown of which income types (for example, taxable Social Security benefits, tax‑exempt municipal bond interest, foreign earned income exclusions) are included or excluded in every case; SSA form instructions note that certain tax‑exempt income is added, but detailed treatment of each income type is not fully enumerated in the sources provided here [4] [3].
6. Timing quirks, appeals and life‑changing events
Because SSA relies on IRS returns two years earlier, a one‑time income spike (a large capital gain or Roth conversion) can trigger IRMAA for two years later; Congress and advisers have repeatedly warned about that “cliff” effect. If your income drops due to a life‑changing event (marriage, divorce, death of a spouse, work reduction), you can request a redetermination using SSA’s appeal process (Form SSA‑44) — the form and guidance explain how to ask SSA to use more recent tax information when appropriate [5] [4] [8].
7. Strategies cited by advisers — context and caution
Financial advisers in the sources point to strategies such as timing Roth conversions, harvesting losses to offset gains, or managing distributions to avoid pushing MAGI over a threshold; these are presented as planning tools but the sources also implicitly warn that timing mistakes or one‑off income events can still create exposure because the IRMAA calculation uses tax returns already filed [5] [8] [9].
8. Conflicting numbers and how to resolve them
Different outlets report the same core rules but occasionally show slightly different estimates of how many beneficiaries pay IRMAA (reports range around 5–8% of enrollees) and give varying dollar‑amount examples for surcharges; for the authoritative technical figures rely on CMS/SSA releases for the year’s premium and surcharge tables and use your 2023 tax return to estimate 2025 exposure [1] [3] [2].
Limitations and next steps: official SSA or CMS notices and Form SSA‑44 provide the definitive rules and the year’s exact surcharge table; because the supplied sources do not provide a full line‑by‑line list of income inclusions/exclusions, consult SSA guidance or your tax adviser for how specific income types (e.g., taxable vs. non‑taxable Social Security, municipal bond interest, foreign income exclusions, capital gains) affect MAGI for IRMAA (available sources do not mention a complete line‑by‑line list) [4] [6].