For many retirees, an extra dollar of income sounds like a small win. But if it nudges your income above a Medicare threshold, it could also put you in a higher premium tier.
That’s the “IRMAA cliff.” The Income-Related Monthly Adjustment Amount, or IRMAA, is an additional charge on Medicare Part B and Part D for people whose income exceeds specified levels. It can matter when you’re coordinating retirement income, selling a business or property, or considering a Roth conversion, especially if your move to the Texas Hill Country is part of a larger financial transition.
This is general education, not personalized tax or Medicare advice. The details of your income and filing status matter, so confirm your own situation with Social Security, Medicare, and a qualified tax professional.
How IRMAA works
Social Security generally determines Medicare IRMAA using income from the federal tax return filed two years earlier. That means the 2026 premium determination generally looks at your 2024 income. For IRMAA, modified adjusted gross income (MAGI) is generally your adjusted gross income plus tax-exempt interest, as explained by the Social Security Administration.
The result is a tiered system. Rather than gradually increasing with every extra dollar, the monthly surcharge can rise when MAGI crosses a threshold. The SSA’s 2026 IRMAA tables list thresholds that vary by tax filing status. For example, the first threshold is $109,000 for many individual filers and $218,000 for married couples filing jointly. Married people filing separately may face different rules.
Not everyone pays the same amount. IRMAA applies to people enrolled in Medicare Part B and, for Part D, those with prescription drug coverage. The adjustment is generally assessed per beneficiary, not as one shared premium for a couple.
Why one extra dollar can matter
For 2026, the standard Part B premium is $202.90 per month, according to CMS. Imagine an individual filer whose 2024 MAGI is exactly $109,000. If it were $109,001 instead, that person would fall into the next income tier under the published 2026 schedule.
In that first tier, the total monthly Part B premium is $284.10-an $81.20 increase over the standard premium. The Part D IRMAA is an additional $14.50 per month, on top of the person’s plan premium. If those amounts applied for all 12 months, the added Part B and Part D adjustments would total $1,148.40 for the year.
That example describes how a threshold works; it is not a prediction of anyone’s individual bill. The exact premium depends on filing status, enrollment, and the income information Social Security uses. The Part D adjustment is separate from the prescription plan’s own premium. You can check the current rules through Medicare’s premium information.
Income events to consider in a retirement plan
The two-year lookback can make an income event relevant well after the year it occurs. In retirement income planning in the Texas Hill Country, it may be useful to discuss the possible Medicare premium effect of an event with your tax professional before it happens.
- Roth conversions: A conversion may add taxable income in the year it occurs and could affect a later IRMAA determination. It may also influence future taxable withdrawals, so the potential effects should be considered together, not in isolation.
- Capital gains: Selling investments at a gain can affect MAGI. The size and tax treatment of a gain depend on the specific facts.
- Selling a business or appreciated property: A sale can involve several kinds of income and may have a substantial effect on the tax return used for a future IRMAA determination. The taxable amount is not necessarily the same as the sale price.
- Required minimum distributions: Many people must begin taking RMDs from certain tax-deferred retirement accounts at age 73 under current rules, though the applicable start age can depend on individual circumstances and account type. Distributions may add to taxable income. The IRS explains RMD rules.
- Other large income events: A bonus, deferred compensation, or another one-time event may also change income in the relevant tax year.
Texas Hill Country Retirement has also published a 2026 Medicare Part B guide for Texas retirees. For related background on required distributions and Roth-conversion considerations, see Strategic Distributions: Aligning Your 2026 RMDs with a Comprehensive Wealth Strategy.
Moving to Texas changes one part of the picture, not all of it
Texas does not impose an individual income tax, as described in the Texas Constitution. For people relocating from California, Colorado, or Illinois, that can change the state income-tax landscape after a move. It does not eliminate federal income tax or Medicare IRMAA.
For Hill Country transplants, the federal Medicare surcharge may remain an important income-related premium factor even after the state-tax picture changes. A move may also involve a business transition, property sale, or other one-time income event, so it can be helpful to look at the timing of those decisions alongside Medicare and tax questions. State tax obligations in the year of a move can depend on individual circumstances; a qualified tax professional can help clarify them.
What if income has fallen since the tax year Social Security used?
A past tax return may not reflect a significant change in circumstances. Social Security allows people to request a review in certain situations involving qualifying life-changing events and reduced income. Examples may include stopping or reducing work or the death of a spouse.
Eligibility depends on the rules and evidence for an individual case. A change in income alone does not automatically mean an IRMAA adjustment will be granted. Visit the SSA’s IRMAA information page to understand the current process, and contact Social Security for guidance specific to your situation.
A practical takeaway
Before a Roth conversion, asset sale, business transition, or other major income event, ask your tax professional how it could affect your federal income and discuss whether it might influence a future Medicare premium tier. Then verify the applicable thresholds and premium information with Social Security and Medicare.
The goal is not to avoid every threshold at any cost. A decision that increases income or premiums in one year may still make sense for other reasons. Instead, consider the full picture: timing, cash flow, future withdrawals, Medicare coverage, and the retirement lifestyle you want to support.
For guidance on retirement income and investment considerations, learn more about Portafolio Capital Management dba Mau Sanchez Capital. A fiduciary financial advisor can discuss financial planning considerations, while a qualified tax professional can address your personal tax situation.
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Portafolio Capital Management dba Mau Sanchez Capital is a Registered Investment Adviser. This content is for informational purposes only and does not constitute investment advice or a solicitation to buy or sell any security. Advisory services are provided only pursuant to a written advisory agreement.
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