Yes, IRMAA payments are tax deductible. You can deduct them as a self-employed health insurance expense on Schedule 1 (Form 1040) or as an itemized medical expense on Schedule A — depending on your work status and financial picture. Under IRC §162(l), self-employed individuals deduct IRMAA above the line, which reduces adjusted gross income. Under IRC §213(a), anyone who itemizes can deduct IRMAA as a medical expense — but only the portion that exceeds 7.5% of AGI.
About 8% of all Medicare beneficiaries pay IRMAA surcharges each year. These extra costs can add thousands of dollars to your annual Medicare bill, making the tax deduction a real money-saver for retirees and self-employed workers alike.
- 💰 How to deduct IRMAA payments using two different methods — and which one saves you more
- 📋 The exact IRS forms, line items, and steps needed to claim the deduction
- ⚖️ How MAGI, AGI, and taxable income differ — and why it matters for your IRMAA bill
- 🛡️ Common filing mistakes that trigger IRS problems and how to avoid every one of them
- 📉 Strategies to lower your MAGI and potentially reduce or eliminate IRMAA altogether
What IRMAA Is and Why It Hits Your Wallet Hard
IRMAA stands for Income-Related Monthly Adjustment Amount. It is an extra charge the federal government adds on top of your standard Medicare Part B and Part D premiums when your income exceeds certain thresholds. The Social Security Administration (SSA) — not Medicare itself — determines whether you owe the surcharge.
The SSA looks at your modified adjusted gross income (MAGI) from your federal tax return filed two years earlier. Your 2026 IRMAA is based on your 2024 tax return, and your 2025 IRMAA was based on your 2023 return. By the time you receive the surcharge notice, the income that triggered it is already in the past.
MAGI starts with your adjusted gross income (AGI) and adds back specific items. The most common add-back is tax-exempt interest from municipal bonds. Many retirees invest in municipal bonds thinking the interest is “invisible” for Medicare purposes — but it gets counted right back in.
The SSA sends you a letter called an Initial IRMAA Determination if you owe the surcharge. The extra amount is then deducted from your monthly Social Security benefit. If you have not started receiving Social Security yet, the SSA bills you directly through CMS.
How the SSA Calculates Your IRMAA Surcharge
The SSA pulls your income data directly from the IRS — you do not need to submit anything. The agency uses your MAGI from two years prior and matches it against a set of income brackets that adjust each year for inflation. If your MAGI falls above the lowest threshold, you pay a surcharge on top of the standard Part B and Part D premiums.
The surcharge operates on a sliding scale with five income tiers. Each tier increases the monthly surcharge amount. A person who earns $115,000 pays a smaller IRMAA than someone earning $400,000, but both pay something extra.
One critical detail: IRMAA applies per person, not per household. If both spouses are enrolled in Medicare and the couple’s joint MAGI crosses a threshold, both spouses pay the surcharge individually. This doubles the financial impact for married couples.
2026 IRMAA Brackets: How Much Extra You’ll Pay
The 2026 IRMAA thresholds increased from 2025, reflecting inflation adjustments. The standard Part B premium in 2026 is $202.90 per month. The surcharges below are added on top of that base premium.
2026 Part B IRMAA Surcharges
| 2024 MAGI (Single / Joint) | Monthly Surcharge |
|---|---|
| ≤ $109,000 / ≤ $218,000 | $0 (no surcharge) |
| $109,001–$137,000 / $218,001–$274,000 | $81.20 |
| $137,001–$171,000 / $274,001–$342,000 | $202.90 |
| $171,001–$205,000 / $342,001–$410,000 | $324.60 |
| $205,001–$500,000 / $410,001–$750,000 | $445.90 |
| > $500,000 / > $750,000 | $486.50 |
A person in the highest IRMAA tier pays $202.90 + $486.50 = $689.40 per month for Part B alone. That adds up to $8,272.80 per year — a cost that makes the tax deduction worth every minute of paperwork.
2026 Part D IRMAA Surcharges
| 2024 MAGI (Single / Joint) | Monthly Surcharge |
|---|---|
| ≤ $109,000 / ≤ $218,000 | $0 (no surcharge) |
| $109,001–$137,000 / $218,001–$274,000 | $14.50 |
| $137,001–$171,000 / $274,001–$342,000 | $37.50 |
| $171,001–$205,000 / $342,001–$410,000 | $60.40 |
2025 IRMAA Brackets for Comparison
The 2025 brackets use your 2023 MAGI. These thresholds are slightly lower than 2026 because the inflation adjustments had not yet taken effect.
2025 Part B IRMAA Surcharges
| 2023 MAGI (Single / Joint) | Monthly Surcharge |
|---|---|
| ≤ $106,000 / ≤ $212,000 | $0 (no surcharge) |
| $106,001–$133,000 / $212,001–$266,000 | $74.00 |
| $133,001–$167,000 / $266,001–$334,000 | $185.00 |
| $167,001–$200,000 / $334,001–$400,000 | $259.90 |
2025 Part D IRMAA Surcharges
| 2023 MAGI (Single / Joint) | Monthly Surcharge |
|---|---|
| ≤ $106,000 / ≤ $212,000 | $0 (no surcharge) |
| $106,001–$133,000 / $212,001–$266,000 | $13.70 |
| $133,001–$167,000 / $266,001–$334,000 | $35.30 |
| $167,001–$200,000 / $334,001–$400,000 | $57.00 |
The jump from 2025 to 2026 means some people who were just below the old threshold now find themselves above the new one. Tracking your MAGI two years ahead is one of the best ways to avoid surprises.
Two Paths to Deducting IRMAA on Your Taxes
Federal tax law gives you two ways to deduct IRMAA payments. The IRS treats IRMAA surcharges the same as regular Medicare premiums for deduction purposes — meaning the full surcharge amount qualifies under both methods.
Path 1 is the self-employed health insurance deduction on Schedule 1 (Form 1040), Line 17. This is an above-the-line deduction, which means it reduces your AGI directly. You do not need to itemize to use it.
Path 2 is the itemized medical expense deduction on Schedule A (Form 1040). This is a below-the-line deduction. It only helps you if your total medical expenses exceed 7.5% of your AGI — and only if itemizing beats the standard deduction.
You cannot use both paths for the same premiums. The IRS calls this the “double-dipping” rule. You must pick one or the other — and choosing the right one can mean a difference of hundreds or even thousands of dollars in tax savings.
The Self-Employed Shortcut: Deducting IRMAA on Schedule 1
If you are self-employed and earn a net profit from your business, you can deduct 100% of your Medicare premiums — including IRMAA surcharges — as a self-employed health insurance deduction. The IRS has allowed this since 2012, when it issued guidance confirming that Medicare premiums qualify under IRC §162(l).
This deduction covers premiums for Medicare Parts A, B, C (Medicare Advantage), D, and Medigap plans. It also covers your spouse’s Medicare premiums if your spouse is enrolled. The deduction goes on Schedule 1, Line 17, and it flows directly to Form 1040 to reduce your AGI.
The IRS considers you self-employed if you own a business as a sole proprietor (Schedule C), partner (Schedule E), LLC member, or S corporation shareholder with at least 2% of the company stock. Americans age 65 and older are self-employed more than any other demographic, so this deduction applies to a large number of Medicare enrollees.
There are two hard limits on this deduction. First, you cannot deduct more in premiums than your business earned during the year. If your business earned $2,000 and your premiums totaled $5,000, you can only deduct $2,000. Second, you cannot use this deduction if you or your spouse are eligible to enroll in an employer-subsidized health plan — even if you choose not to enroll in that plan.
How Form 7206 Works Step by Step
The IRS requires self-employed individuals to use Form 7206 to calculate the self-employed health insurance deduction. This form feeds the final number to Schedule 1, Line 17.
- Line 1: Enter the total Medicare premiums you paid during the tax year, including base premiums and IRMAA surcharges for Parts B and D
- Line 2: Enter the number of months you were eligible for the self-employed deduction (you were self-employed, earned a profit, and had no access to an employer-sponsored plan)
- Lines 3–5: Calculate the monthly premium average and apply it to your eligible months
- Line 6: Compare your total eligible premiums against your net self-employment income — the smaller number is your deduction
- Final step: Transfer the amount from Line 6 to Schedule 1, Line 17
Keep your SSA-1099 form handy. This document from the Social Security Administration shows all Medicare premiums withheld from your Social Security benefits during the year. If you pay premiums directly to an insurer for Part D or Medigap, gather those billing statements too.
If your business is structured as an S corporation, the corporation can pay your Medicare premiums directly and count them as a business expense. The corporation can also reimburse you, with the amount included in your gross wages on your W-2, and you then deduct it on Schedule 1 of your 1040.
The Itemized Route: Claiming IRMAA on Schedule A
You do not need to be self-employed to deduct IRMAA. Any taxpayer who itemizes deductions can include Medicare premiums — including IRMAA surcharges — as medical expenses on Schedule A. This path is open to retirees, W-2 employees, and anyone else enrolled in Medicare.
The catch is the 7.5% AGI floor. Under IRC §213(a), you can only deduct the portion of your total medical expenses that exceeds 7.5% of your adjusted gross income. This threshold was made permanent by the Taxpayer Certainty and Disaster Tax Relief Act of 2020 — it had previously been set to increase to 10%.
Your qualifying medical expenses include more than just Medicare premiums and IRMAA. You can also count Medicare deductibles, copayments, coinsurance, and out-of-pocket costs for dental, vision, hearing, and long-term care. The more qualifying expenses you have, the easier it is to clear the 7.5% hurdle.
How the 7.5% AGI Threshold Works in Practice
Imagine your AGI is $80,000. Multiply that by 7.5%, and you get $6,000. You can only deduct medical expenses above $6,000. If your total qualifying medical expenses — including IRMAA, premiums, prescriptions, dental work, and hearing aids — add up to $10,000, you deduct $4,000 ($10,000 − $6,000).
The Big Beautiful Bill enacted in 2025 permanently raised the standard deduction. For 2025, the standard deduction is $15,750 for single filers and $31,500 for married couples filing jointly. Seniors 65 and older receive an additional standard deduction of $2,000 (single) or $1,600 per spouse (married). Most taxpayers come out ahead with the standard deduction, which means itemizing — and this IRMAA deduction path — only benefits people with unusually high medical expenses or other itemizable costs.
Self-Employed vs. Itemized: Which Path Saves More Money?
| Feature | Schedule 1 (Self-Employed) |
|---|---|
| Type | Above-the-line deduction |
| Reduces AGI? | Yes |
| Requires itemizing? | No |
| Income floor | None (but limited to business profit) |
| Eligibility | Self-employed with net profit |
| Feature | Schedule A (Itemized) |
|---|---|
| Type | Below-the-line deduction |
| Reduces AGI? | No |
| Requires itemizing? | Yes |
| Income floor | 7.5% of AGI |
| Eligibility | Any taxpayer who itemizes |
The self-employed deduction is almost always the better deal if you qualify. It reduces your AGI directly, which can lower other tax calculations that depend on AGI — including the amount of Social Security benefits subject to tax. The itemized deduction, on the other hand, only reduces your taxable income and must clear the 7.5% hurdle first.
Tax professionals recommend calculating your deduction both ways to see which saves more. If your business had a loss or earned very little, the itemized path may provide a bigger benefit — especially if you have other large medical expenses to combine with IRMAA.
MAGI vs. AGI vs. Taxable Income: Why the Difference Matters
These three numbers appear on your tax return and serve different purposes. Confusing them is one of the most common reasons people miscalculate their IRMAA exposure.
Adjusted Gross Income (AGI) is your total income minus above-the-line deductions like retirement contributions, student loan interest, and the self-employed health insurance deduction. You find it on Form 1040, Line 11.
Modified Adjusted Gross Income (MAGI) starts with your AGI and adds back certain items — most importantly, tax-exempt interest from municipal bonds. This is the number the SSA uses to determine your IRMAA. It is often close to your AGI, but it can be higher if you hold tax-exempt bonds.
Taxable income is your AGI minus either the standard deduction or your itemized deductions. This number determines how much federal income tax you owe. Standard and itemized deductions reduce taxable income, but they do not reduce AGI or MAGI.
This distinction explains why the self-employed IRMAA deduction is so valuable: it lowers your AGI, which also lowers your MAGI — potentially reducing your future IRMAA surcharges. The itemized deduction only lowers taxable income and has zero effect on MAGI or future IRMAA calculations.
How the New Senior Bonus Deduction Affects IRMAA
The Big Beautiful Bill, signed into law on July 4, 2025, created a new “senior bonus” deduction of up to $6,000 for taxpayers age 65 and older ($12,000 for married couples where both spouses qualify). The deduction first applies to 2025 tax returns filed in early 2026 and runs through 2028 unless Congress extends it.
The bonus phases out when MAGI exceeds roughly $75,000 for single filers and $150,000 for joint filers. It is a below-the-line deduction, layered on top of the existing standard deduction — and it is also available to those who itemize.
Here is the critical point: the senior bonus deduction reduces your taxable income, not your AGI or MAGI. The SSA still uses your MAGI to calculate IRMAA, and the senior bonus does not touch that number. It lowers your tax bill but will not pull you below an IRMAA threshold on its own.
The bonus can still play a role in broader IRMAA planning. If the extra deduction reduces your overall tax burden in a year when you do a Roth conversion, you may feel more comfortable managing the short-term tax hit. The Roth conversion still increases MAGI (and may trigger IRMAA two years later), but the senior bonus offsets some of the tax cost in the conversion year.
Related reading
- Do High Earners Pay More for Medicare? (w/Examples) + FAQs
- Are Medicare Part B Premiums Tax Deductible? (w/Examples) + FAQs
- Are Medicare Part D Premiums Tax Deductible? (w/Examples) + FAQs
- Are IRMAA Surcharges Permanent? (w/Examples) + FAQs
- Are IRMAA Premiums Per Person? (w/Examples) + FAQs
- Can I Deduct Section 105 Reimbursements? (w/Examples) + FAQs
- Is Section 105 Reimbursement Taxable Income? (w/Examples) + FAQs