Here is what you need to know about Medicare IRMAA for 2025:
- What is IRMAA for Medicare?
- How IRMAA is calculated?
- How to avoid IRMAA?
Key Takeaways
- IRMAA is a shadow tax that affects high-earning Medicare members.
- Your 2025 IRMAA is based on your Modified Adjusted Gross Income (MAGI) from 2023.
- The Medicare Part B2025 standard monthly premium is $185.00.
- The 2025 IRMAA brackets can increase Medicare Part B monthly premiums up to $443.90.
- The 2025 IRMAA brackets can increase Medicare Part D monthly premiums up to $85.00.
- If you want to appeal your IRMAA penalty in 2025, you must file Form SSA-44.
- Lowering your Modified Adjusted Gross Income (MAGI) can help you reduce or avoid IRMAA.
What Is Medicare IRMAA
IRMAA stands for Income Related Monthly Adjustment Amount. The Social Security Administration calculates this shadow tax which shows up as an increase on Medicare Part B and Part D standard monthly premiums.
IRMAA is a shadow tax that shows up as a monthly surcharge that Medicare members must pay if they make “too much money”.
How is IRMAA Calculated?
An Income Related Monthly Adjustment Amount (IRMAA) is based on your Modified Adjusted Gross Income (MAGI) from two years ago.
So, your 2025 IRMAA brackets are based on your MAGI from 2023.
An Income Related Monthly Adjustment Amount (IRMAA) calculation is based on a Medicare-specific form of a beneficiary’s Modified Adjusted Gross Income (MAGI).
To calculate your MAGI for the 2025 IRMAA brackets, look at your 2023 tax return and find your Adjusted Gross Income (AGI). This is why we call it a shadow tax. IRMAA uses tax-free interest as part of the equation to trigger this penalty.
Next, add tax-exempt interest from municipal bonds and any interest earned from U.S. Savings Bonds.
The total amount will represent your 2023 Modified Adjusted Gross Income (MAGI), specific to the Medicare IRMAA brackets 2025.
What Are the 2025 IRMAA Brackets
Your 2025 IRMAA bracket is determined by whether you file a joint tax return or file as a single filer and your Modified Adjusted Gross Income (MAGI) in 2023.
Medicare Part B and Part D IRMAA
In 2025, the standard monthly premium for Medicare Part B increased to $185.00.
However, the average standard monthly premium for Medicare Part D will decrease to $46.50 this year.
These are the minimum income thresholds to trigger Medicare IRMAA and pay higher Part B and D monthly premiums in 2025:
- $106,000+ (individual tax return); or
- $212,000+ (joint tax return)
2025 Medicare IRMAA brackets so that you know whether you will be impacted.
| 2025 IRMAA BRACKETS FOR MEDICARE PART B & PART D | ||||
| If your filing status and MAGI in the tax year 2023 was: | ||||
| File Individual Tax Return (2023 Income) | File Joint Tax Return (2023 Income) | Married Filing Separate (2023 Income) | Part B (Monthly Premium) | Part D (Monthly Premium) |
| $106,000 or less | $212,000 or less | $106,000 or less | $185.00 | Your Premium (No Surcharge) |
| Above $106,000 to $133,000 |
Above $212,000 to $266,000 |
N/A | $259.00 | Plan Premium + $13.70 |
| Above $133,000 to $167,000 |
Above $266,000 to $334,000 |
N/A | $370.00 | Plan Premium + $35.30 |
| Above $167,000 to $200,000 |
Above $334,000 to $400,000 |
N/A | $480.90 | Plan Premium + $57.00 |
| Above $200,000 and less than $500,000 |
Above $400,000 and less than $750,000 |
Above $106,000 and less than $394,000 |
$591.90 | Plan Premium + $78.60 |
| $500,000 or more | $750,000 or more | $394,000 or more | $628.90 | Plan Premium + $85.80 |
IRMAA Case Studies
So, let’s review a few examplees so that you can see how this may apply to you.
These two (hypothetical) IRMAA case studies that show how this surcharge works in practice.
IRMAA Case Study #1: Mary
Individual Tax Payer
- Jim’s MAGI was$102,000 in 2023.
- He will notbe subject to IRMAA in 2025 because her income is below the $106,000 income threshold.
- His 2025 Medicare Part B premium will be $185.00/month(no IRMAA penalty).
- His 2025 Medicare Part D premium will be based on what her plan charges (no IRMAA penalty).
IRMAA Case Study #2: Dan and Michelle
Married Filing Jointly
- Their MAGI was $218,500 in 2023.
- They willbe subject to IRMAA in 2025 because their income exceeded the $212,000
- Their 2025 Medicare Part B total premium will be $259.00 per month(base premium of $185.00 + IRMAA surcharge of $74.00).
- Their 2025 Medicare Part D total premium will be the base policy cost (a.k.a. “Plan Premium”) + a surcharge of $13.70 per month.
How to Avoid IRMAA
Planning ahead to reduce your Modified Adjusted Gross Income (MAGI) is the most effective way to avoid or reduce IRMAA.
For example, donating appreciated assets directly to charity will avoid capital gains taxes and, in turn, lower your MAGI.
Also, if you’re still working and have earned income, making tax-deductible contributions to a retirement account will reduce your Modified Adjusted Gross Income (MAGI) and potentially reduce or avoid IRMAA.
A few other strategies to avoid IRMAA (or reduce it) include:
- Tax-Loss Harvesting
- Using a dynamic retirement withdrawal strategy
- Using tax-efficient investments
- Tax-Gain Harvesting
- Strategic Roth IRA conversions
It may be possible to avoid IRMAA in 2024 may not be possible to avoid IRMAA, it is a good practice to review whether you can reduce your Modified Adjusted Gross Income (MAGI) and also plan ahead for the next year.
Your personal financial situation changes every year. Tax laws can change. It is a smart financial move to understand whether you can reduce or avoid IRMAA to keep more of your money in your pocket.
Why was IRMAA created?
Medicare is under funded. Medicare taxes on wages are 2.9%, but Social Security payroll taxes are 12.4%. So, in order to help with this funding GAP, Congress created IRMAA in 2003 as part of the Medicare Modernization Act, but the brackets weren’t implemented until 2007.
How to Plan for Future Medicare IRMAA Brackets
To plan for future medicare IRMAA brackets, estimate your Modified Adjusted Gross Income (MAGI) for upcoming years. Remember that IRMAA tax calculations use your income from two years prior.
Review your financial statements and adjust for any anticipated income changes, such as retirement withdrawals, capital gains, or salary increases.
Long-Term Financial Planning Strategies
Reducing your MAGI is key to avoiding or minimizing IRMAA surcharges. Consider these strategies:
- Roth Conversions:Convert Traditional IRA funds to a Roth IRA in years when your income is lower to reduce future taxable income.
- Tax-Efficient Investments:Invest in tax-advantaged accounts like Roth IRAs or Health Savings Accounts (HSAs) to lower taxable income.
- Charitable Contributions:Donate appreciated assets directly to charity to avoid capital gains taxes.
- Tax-Smart Withdrawals:Develop a tax-smart retirement withdrawal strategy that balances income sources to keep your MAGI within lower IRMAA brackets.
- Skip Insurance Products:While insurance products are pitched as tax-friendly, popular solutions like Indexed Universal Life (IUL) insurance are bad investments that can create unexpected tax liabilities.
By proactively managing your income and employing these strategies, you can effectively plan for future IRMAA Medicare brackets and reduce potential surcharges.
Bottom Line
An Income Related Monthly Adjustment Amount (IRMAA) increases Medicare Part B and Part D premiums for high earners. However, Medicare beneficiaries can employ several strategies to reduce their MAGI and reduce or avoid IRMAA adjustments.
If you only take one thing from this article, it’s that your income this year will affect your IRMAA bracket two years from now.
Beyond managing your income appropriately, understanding the basics of Medicare and periodically reviewing your Part D plan (or Medicare Advantage Plan) can also help you save money on your premiums and future out-of-pocket costs.
