Medicare uses your tax return from two years prior to set your current premiums. So for 2026 premiums, the Social Security Administration (SSA) looks at your 2024 tax return (filed in 2025). If that return isn’t available yet, they’ll use your 2023 return instead. This two-year look-back applies to both Part B and Part D premiums and determines whether you’ll pay a surcharge on top of the standard amount.
This isn’t technically a “look-back period” in the way Medicaid uses the term (Medicaid reviews years of financial transactions to check for asset transfers). Medicare’s version is simpler: it’s a two-year lag between the income you earned and the premiums you’re charged based on that income.
How the Two-Year Lag Works
Each year, the IRS shares your most recent tax return data with the SSA. The SSA then checks whether your income crosses certain thresholds. If it does, you’ll pay an Income-Related Monthly Adjustment Amount, commonly called IRMAA, on top of the standard Part B and Part D premiums.
The income figure they use is your modified adjusted gross income, or MAGI. It’s calculated by taking your adjusted gross income (line 11 on your 1040) and adding any tax-exempt interest income (line 2a). That’s it. Capital gains, pension distributions, Roth conversions, rental income: if it shows up in your AGI or tax-exempt interest, it counts. This means a one-time event like selling a property or converting a large IRA balance can push your premiums up two years later, even if your income has since dropped back down.
2026 Income Thresholds and Premiums
For 2026, the SSA uses your 2024 MAGI to determine whether you owe a surcharge. The thresholds differ based on how you file your taxes.
Single Filers
- $109,000 or below: Standard premium (no surcharge)
- $109,001 to $137,000: $284.10/month
- $137,001 to $171,000: $405.80/month
- $171,001 to $205,000: $527.50/month
- $205,001 to $499,999: $649.20/month
- $500,000 or more: $689.90/month
Married Filing Jointly
- $218,000 or below: Standard premium (no surcharge)
- $218,001 to $274,000: $284.10/month
- $274,001 to $342,000: $405.80/month
- $342,001 to $410,000: $527.50/month
- $410,001 to $749,999: $649.20/month
- $750,000 or more: $689.90/month
Married Filing Separately
If you’re married but file separately, the brackets are much narrower. Income above $109,000 jumps straight to $649.20 per month, and income at $391,000 or above reaches the maximum of $689.90. This filing status gets the least favorable treatment under IRMAA.
Why the Two-Year Delay Catches People Off Guard
The most common frustration with this system hits people who’ve just retired. You might have earned $250,000 in your last working year, then retired and dropped to $50,000 in Social Security and pension income. But for the next two years, Medicare still bases your premiums on that higher earning year. You’re paying surcharges that don’t reflect your current financial reality.
The same problem shows up after one-time financial events. Selling a business, cashing out stock options, or doing a large Roth conversion can spike your MAGI for a single year. Two years later, that spike flows through to your Medicare premiums, even though it was a one-time event. If you’re approaching Medicare age, this is worth factoring into the timing of large financial moves.
Life-Changing Events That Override the Look-Back
The SSA recognizes that a two-year-old tax return doesn’t always reflect your current situation. If you’ve experienced a qualifying life-changing event, you can ask the SSA to use a more recent year’s income (or an estimate of your current year’s income) instead. There are eight qualifying events:
- Death of a spouse
- Marriage
- Divorce or annulment
- Work reduction (you or your spouse cut hours)
- Work stoppage (you or your spouse stopped working entirely)
- Loss of income-producing property (due to disaster, arson, fraud, or theft, not a voluntary sale)
- Loss of pension income (your employer’s pension plan was terminated or reorganized)
- Employer settlement payment (from a current or former employer’s bankruptcy or reorganization)
Retirement counts as a “work stoppage,” which is why this provision matters most to people who’ve recently stopped working. To request the adjustment, you file Form SSA-44 with the Social Security Administration and provide documentation of the event and your revised income estimate.
What to Do if Your Tax Return Changed
If you filed an amended tax return that changes your MAGI for the year the SSA used, you can ask them to recalculate your premiums. You’ll need to provide a copy of the amended return along with the IRS acknowledgment receipt showing they accepted it. This is worth doing if the amendment would drop you into a lower IRMAA bracket or eliminate the surcharge entirely.
If you didn’t file a return for the year in question, the SSA will ask you to provide a signed copy of the return once it’s filed. They rely on whatever the IRS gives them, so if there’s a discrepancy between what you filed and what the SSA received, contacting them directly with documentation is the path to correcting it.
Planning Around the Two-Year Window
Because the look-back is exactly two years, you can plan around it. If you’re turning 65 in 2027, your 2025 income is the one that will set your initial Medicare premiums. That makes 2025 the year to be strategic about Roth conversions, capital gains harvesting, or other moves that inflate your AGI.
Spreading large taxable events across multiple years can keep you below a threshold that would otherwise trigger thousands of dollars in annual surcharges. The difference between the standard Part B premium and the highest IRMAA tier is substantial, over $500 per month. For a married couple where both spouses are on Medicare, that gap doubles. Even landing one bracket lower can save several thousand dollars over the course of a year.