IRMAA Tiers and How Your MAGI Triggers Medicare Surcharges
Medicare premiums are not fixed. For retirees with higher incomes, the government adds surcharges called IRMAA — Income-Related Monthly Adjustment Amounts. A single charitable giving strategy, the Qualified Charitable Distribution (QCD), can reduce those surcharges in ways a standard charitable deduction cannot. Understanding the difference between a QCD vs charitable deduction IRMAA savings strategy is essential for anyone over 70½ who wants to give to charity without increasing their Medicare costs.
IRMAA surcharges are layered on top of the standard Medicare Part B and Part D premiums. The trigger is your Modified Adjusted Gross Income (MAGI) from two years prior. For 2025 premiums, the IRS uses your 2023 tax return. For 2026 premiums, it will use your 2024 return.
The Centers for Medicare & Medicaid Services (CMS) publishes five IRMAA tiers for Part B. For 2025, single filers with MAGI below $106,000 and married joint filers below $212,000 pay the standard Part B premium of $185 per month.1 Above those thresholds, surcharges begin.
| Filing Status | 2025 MAGI Threshold | Monthly Part B Premium | Monthly Surcharge |
|---|---|---|---|
| Single, under $106,000 | Standard | $185.00 | $0 |
| Single, $106,000–$133,000 | Tier 1 | $259.00 | $74.00 |
| Single, $133,000–$167,000 | Tier 2 | $370.00 | $185.00 |
| Single, $167,000–$200,000 | Tier 3 | $480.90 | $295.90 |
| Single, $200,000–$500,000 | Tier 4 | $580.90 | $395.90 |
| Single, over $500,000 | Tier 5 | $604.90 | $419.30 |
Married joint filers double each threshold. A couple with MAGI of $220,000, for example, falls into Tier 1 and pays an extra $74 per person per month — $1,776 per year in surcharges alone.
What Is a QCD and How It Lowers Your Taxable Income
A Qualified Charitable Distribution (QCD) allows IRA owners aged 70½ or older to transfer up to $108,000 per year directly from their IRA to a qualified charity.2 The key tax treatment: the distribution is excluded entirely from gross income. It never appears on the "taxable income" line of your return.
This is different from taking a normal IRA distribution, donating the cash, and claiming a charitable deduction. With a normal distribution, the full amount counts as income first. A QCD bypasses that step entirely.
The IRS requires the transfer to go directly from the IRA custodian to the charity. Checks made payable to the IRA owner and then forwarded to a charity do not qualify.3 The charity must also be eligible — donor-advised funds and private foundations are excluded.
For 2026, the QCD limit is estimated to rise to $115,000 per person, adjusted for inflation.4 A married couple with separate IRAs could transfer up to $230,000 combined.
How Charitable Deductions Work for Itemizers vs Standard Deduction Filers
A standard charitable deduction reduces taxable income only if you itemize deductions on Schedule A. For 2025, the standard deduction is $15,000 for single filers and $30,000 for married joint filers1. If your total itemized deductions — mortgage interest, state taxes, medical expenses, and charitable gifts — fall below those amounts, you receive zero tax benefit from donating.
Consider a single retiree with $12,000 in itemized deductions before charitable gifts. A $10,000 donation would push total deductions to $22,000, exceeding the $15,000 standard deduction by $7,0001. That $7,000 reduces taxable income at the retiree's marginal rate.
But the donation also increases MAGI if the cash came from an IRA distribution. The retiree would need to withdraw $10,000 from the IRA, report it as income, donate it, and claim the deduction. The net effect on taxable income is the same as a QCD, but the MAGI impact is not.
IRMAA Surcharges Explained — Income Thresholds for 2025 and 2026
IRMAA surcharges apply to both Part B and Part D premiums. The Part D surcharge is calculated separately but uses the same MAGI tiers. For 2025, the Part D surcharge ranges from $13.70 to $85.80 per month depending on income tier.5
The two-year lookback creates a planning trap. A retiree who sells a business in 2024 and reports a large capital gain will see that income reflected in 2026 Medicare premiums. The surcharge persists for the full calendar year, regardless of whether the income was a one-time event.
For 2026, CMS typically announces updated thresholds in November of the prior year. Retirees planning QCDs for 2026 should monitor the November 2025 announcement to confirm exact MAGI breakpoints.
QCD vs Charitable Deduction: Which Strategy Reduces IRMAA More
The QCD wins in nearly every scenario where the retiree is over 70½ and subject to IRMAA. Here is why: a QCD reduces MAGI directly. A charitable deduction does not.
Suppose a married couple has MAGI of $225,000 in 2024, placing them in IRMAA Tier 1 for 2026. They want to donate $20,000 to a charity — for example, their church. If they take a normal IRA distribution and donate, their MAGI stays at $225,000. The charitable deduction reduces taxable income but not MAGI. Their IRMAA surcharge remains.
If they execute a $20,000 QCD instead, their MAGI drops to $205,000 — below the $212,000 married joint threshold. They avoid Tier 1 entirely. The annual savings: roughly $1,776 in Part B surcharges plus approximately $329 in Part D surcharges, for a total of about $2,105 per year1.
| Strategy | MAGI | IRMAA Tier | Annual Part B Surcharge |
|---|---|---|---|
| Normal distribution + deduction | $225,000 | Tier 1 | $1,776 |
| QCD | $205,000 | Standard | $0 |
| Annual savings from QCD | — | — | $1,776 |
The QCD also avoids the itemization requirement. A retiree who takes the standard deduction receives zero tax benefit from a charitable deduction but still gets the full MAGI reduction from a QCD.
Using a QCD to Stay Below the IRMAA Cliff Before RMDs Begin
Required Minimum Distributions (RMDs) begin at age 73 for most retirees. The year you turn 73, your first RMD can push MAGI above an IRMAA threshold unexpectedly. A QCD can satisfy part or all of the RMD while keeping MAGI in check.
The IRS allows QCDs to count toward your RMD for the year.6 If your RMD is $30,000 and you execute a $20,000 QCD, you only need to withdraw $10,000 as a taxable distribution. Your MAGI drops by $20,000 compared to taking the full RMD in cash.[^7]
For retirees between ages 70½ and 72, QCDs are available even though RMDs are not yet required. This window offers a unique opportunity to reduce IRA balances before RMDs begin, potentially lowering future RMD amounts and future IRMAA exposure.
A typical strategy: starting at age 70½, transfer $20,000 to $30,000 per year via QCD to a charity you already support. By age 73, the IRA balance is lower, the RMD is smaller, and the MAGI stays below the IRMAA cliff.
Coordinating QCDs with Social Security and Medicare Enrollment Timing
Social Security benefits are also subject to income-related adjustments, but the coordination with QCDs is indirect. Social Security benefits become taxable when your provisional income — MAGI plus half of Social Security benefits — exceeds certain thresholds. A QCD reduces MAGI, which can lower the taxable portion of Social Security benefits.
Medicare enrollment timing matters for QCD planning. If you delay Part B enrollment because you have employer coverage, your initial enrollment period may fall in a year where your MAGI is temporarily high due to a retirement bonus or severance. A QCD in that year can reduce the MAGI used for your initial Part B premium determination.
The two-year lookback means a QCD executed in 2025 affects 2027 premiums. Retirees should map their QCD plan to the tax year that will be used for the premium year they want to impact. For example, to reduce 2026 premiums, execute QCDs in 2024.
Real-World Example: Comparing Tax and IRMAA Savings Side by Side
Consider a hypothetical retiree, Sarah, age 74, single, with MAGI of $180,000 in 2024. Suppose she wants to donate $25,000 to her alma mater. In this scenario, her 2026 Medicare Part B premium falls into Tier 3 — approximately $480.90 per month — because her MAGI exceeds the Tier 2 threshold.
Option A: Normal IRA distribution plus charitable deduction. Sarah withdraws $25,000 from her IRA, reports $205,000 in MAGI, and donates the cash. She itemizes deductions and claims the $25,000 charitable deduction. Her taxable income drops, but her MAGI rises to $205,000. Her 2026 Part B premium stays at $480.90 per month1. Total annual Part B cost: $5,770.801.
Option B: QCD. Sarah directs her IRA custodian to send $25,000 directly to the university. Her MAGI drops to $155,000 — below the $167,000 Tier 3 threshold1. Her 2026 Part B premium falls to $370.00 per month (Tier 2)1. Total annual Part B cost: $4,440.001.
| Scenario | MAGI | Monthly Part B Premium | Annual Part B Cost |
|---|---|---|---|
| Normal distribution | $205,000 | $480.90 | $5,770.80 |
| QCD | $155,000 | $370.00 | $4,440.00 |
| Annual savings | — | — | $1,330.80 |
Sarah saves $1,330.80 per year in Part B premiums alone1. The Part D surcharge savings add roughly $400 more2. Her total IRMAA savings from the QCD: approximately $1,730 per year3.
Your Next Step
Pull your most recent tax return and identify your MAGI. Compare it to the 2025 IRMAA thresholds for your filing status. If you are within $20,000 of the next tier, calculate the QCD amount needed to drop below that threshold. Contact your IRA custodian and request a direct transfer to a charity you already support. Execute the QCD before December 31 to lock in the MAGI reduction for the premium year two years out.