I spent a great deal of time looking for the policy that @VolvoGirl referenced and intended to post it here, already done. Thank you VolvoGirl!
In my hunt I found there are many different MAGI calculations, some of them dismiss all IRA contributions, add back in foreign income, 1/2 self emp. tax, ect. Even then I questioned if that included SEP IRA contributions. Don't trust AI searches, the results were contradictory depending on how the questions were asked. None of the AI answers I found were actually correct per the policy.
Most of the MAGI calculations (but not MAGI for IRMAA) can be found here;
hunt for IRS MAGI (wouldn't let me post a link - look for result with Modified Adjusted Gross Income
| Internal Revenue Service)
For IRMAA / Medicare premiums (as already mentioned)
Can't post the link as a link but piece it together from
secure. ssa.gov / poms.nsf /lnx /[phone number removed]
A. Policy for MAGI
1. Modified Adjusted Gross Income (MAGI) is the sum of:
The beneficiary’s adjusted gross income (AGI) (found on line 11 of the Internal Revenue Service (IRS)
tax filing form 1040), plus tax-exempt interest income (line 2a of IRS Form 1040).
2. The MAGI used to determine if the income-related monthly adjustment amount (IRMAA) applies is the most recent tax information that IRS is able to provide. Generally, the information is from two years prior to the year for which the premium is being determined, but not more than three years prior. For example, 2026 premiums are generally about how MAGI is used.based on 2024 tax return information. See HI 01101.020
3.Beneficiaries with Medicare Part B, prescription drug coverage, or both, with MAGI above the applicable threshold pay more toward their coverage premiums because of IRMAA. See the policy for MAGI thresholds in CB.
4. Beneficiaries with MAGI above the threshold are subject to a sliding scale increase in their premiums. See HIRMAA Sliding Scale Tables
B. Policy for MAGI thresholds
The MAGI thresholds used for IRMAA calculations are:
IRS Filing Status
20232024
20252026 Married, filing jointly | $194,000 | $206,000 | $212,000 | $218,000 |
All other filing statuses | $97,000 | $103,000 | $106,000 | $109,000 |
The End of the Story and I finally feel comfortable. I know this post is adding some redundancy but I hunted for a long time to find the link on my own, so I'll reiterate again where it's at. Knowing that a Traditional or SEP Traditional IRA contribution might keep you from breaching an IRMAA penalty threshold is a big deal. Go over by $1 and the Medicare premiums increase by 1.4x, jump two thresholds (not shown) and it's 2.0x
Sell a piece of investment property with a significant gain, 2 years later it could be, congratulations you have more expensive Medicare. I did that in 2025, but at least I know it's coming and I mitigated some of it.
I sold a rental we've held for a long time, most of the gain was for capital gains, so I gifted a 19% of the property to my daughter (before the sale, so she was on the title) who's income is low and is the 0% capital gains bracket.
It allowed me to give her a nice bit of money that included money that otherwise would have been paid out as capital gains tax and it will kept me from breaching two medicare premium thresholds. Win Win. If I don't breach the 2nd one in 2026 (which is known) I surely won't breach it in 2027 (unknown) when it counts.
That the rise in the income threshold limits is inflation based, which isn't known, makes it a best guess about where the 2027 brackets for 2025 income will be.
Now I'm planning for next year at to what can I do to reduce AGI, without limiting income.
SEP IRA (can't do non SEP IRA), Self Emp. Medical Premium Deduction and maybe some IBOND purchases (IBONDs don't pay interest until redeemed).
I have RMDs to worry about, but if you are just starting RMDs that extra bit that gets added to the Qualified money pile (tax sheltered accounts) from the IRA contribution; that RMDs turn around and distribute, gets spread out over many years. Still everyone has to do there own projections.
QCDs are another possibility, Qualified Charitable Contributions made directly RMD distributions do not count as income.
QLAC Annuity - Retirement Plan that allows for a limited amount of money to be sheltered and distributed later. it's a possibility if you have some interest income producing non qualified money and want to kick the can down the road (kind of like IBonds). But it does kick the can down the road, you loose a lot of control of the money and so far I haven't found a QLAC that I like.
I could look into LTC, haven't done that.
I'm rambling, time to stop
