Which tax year does Medicare use to calculate IRMAA?
The short answer
Medicare uses your income from two years prior to calculate IRMAA. For example, your 2025 Medicare premiums are based on your 2023 tax return.
The full explanation
IRMAA stands for Income-Related Monthly Adjustment Amount. It's an extra charge added to your Medicare Part B and Part D premiums if your income exceeds certain thresholds. The Social Security Administration handles this calculation, and they use the most recent federal tax return they have on file, which is typically two years old.So if you're enrolling in Medicare in 2025, SSA is looking at your 2023 adjusted gross income. If that income was above the threshold (which changes annually), you'll pay a higher premium. The surcharge is tiered, meaning the more you earned, the higher the added cost.This creates a real-world problem for people who recently retired or had a one-time income spike. Maybe you sold a rental property, took a large 401(k) distribution, or sold a business in 2023. Even if your 2024 and 2025 income are much lower, SSA still sees that 2023 number and applies the surcharge.The good news is you can appeal an IRMAA determination if your income has dropped significantly due to a qualifying life event, like retirement, divorce, or the death of a spouse. This is called a Life Changing Event appeal, and you file it using SSA Form SSA-44. It's worth doing if your current income genuinely doesn't reflect what SSA is using.
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