Projections for Medicare’s 2025 income-related monthly adjustment amount (IRMAA) are out. Now is the time to check your 2023 tax return to see if you might be subject to the surcharge next year. This surcharge is paid by Medicare beneficiaries for Part B and Part D Medicare on top of the standard premiums if their taxable income exceeds certain thresholds.
The IRMAA is calculated on a sliding scale with five income brackets, topping out at $500,000 and $750,000 for individual and joint filing, respectively. These figures change annually with inflation. IRMAA calculations have a two-year lag time. Whether you pay an IRMAA in a given year depends on your tax returns from two years ago.
I scoured the best sources and found sound 2025 projections of the IRMAA brackets and surcharge amounts. The 2025 amounts discussed below are not final ; they are estimates prepared by financial professionals who specialize in Medicare planning and IRMAA issues.
IRMAA is assessed based on your modified adjusted gross income (MAGI)
The Social Security Administration will receive notice to inform you if you are liable for the IRMAA surcharge. However, you can appeal the assessment if your financial situation has changed. For instance, if you amended your tax return, and it changes the income counted to determine the IRMAA (your MAGI ), let the SSA know. They will need to see a copy of the amended tax return you filed and your acknowledgment receipt from the IRS.
Your MAGI amount is calculated anew each year, so your IRMAA can change, or even disappear, depending on how your income fluctuates. Whether or not you pay the IRMAA in 2025 will be determined by your 2023 MAGI. (Your IRMAA eligibility in 2024 was determined by your 2022 MAGI.) There are many definitions of MAGI for different purposes
It's not difficult to determine your Medicare-specific MAGI. Find the beneficiary’s adjusted gross income (AGI) on line 11 of the IRS tax form 1040. AGI is the sum of all your income that is subject to tax — the most common sources for this for retirees is IRA withdrawals, capital gains, dividends, interest from CDs, and only the taxable portion of your social security. You add the amount from line 11 to the tax-exempt interest income that can be found on line 2a of IRS Form 1040.
Projected IRMAA income brackets and surcharges for 2025
Medicare will determine the 2025 IRMAA charge in the 4th quarter of 2024. That is why your IRMAA determination is based on 2023 filing status and income — it's the last data point Medicare can obtain from the IRS to determine the 2025 IRMAA charge.
The IRMAA is indexed for inflation annually. The indexing is based on the percentage by which the average of the Consumer Price Index for Urban Consumers (CPI-U) for the 12-month period ending in the most recent August exceeds the average of the 12-month period that preceded that.
Here are projections for the 2025 IRMAA brackets and surcharge amounts:
Married Medicare beneficiaries that file separately pay a steeper surcharge because there are only two brackets. If income is greater than $102,000 and less than or equal to $403,000 will pay a $406.90 surcharge for Part B coverage and $78.60 for Part D coverage. Income greater than $403,000 will result in a Part B and Part D surcharges of $443.90 and $85.80 respectively.
Bottom line
Income for determining IRMAA comes from the savings vehicles used by many retirees, including from traditional IRAs, 401(k)s and 403(b)s. The IRMAA is a “cliff” surcharge. That means if your modified adjusted gross income exceeds the threshold by as little as a dollar, you will have to pay higher premiums
You should be mindful of the risk of a one-time spike in income that could trigger the IRMAA. To avoid this risk, be sure to properly time a Roth conversion; you can then avoid the IRMAA when you convert and take distributions. Learn more about strategies such as how to lower taxes on required minimum distributions that could otherwise trigger the surcharge.
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