Does Rental Income Count Toward IRMAA? Yes, and Landlords Find Out Two Years Late

Does rental income count toward IRMAA? The two line formula

IRMAA MAGI is your Adjusted Gross Income plus tax-exempt interest. That is the whole formula, and rental income enters through AGI. Rents you collect count, minus the expenses you deduct on Schedule E, including repairs, management fees, insurance, property taxes, and depreciation. Depreciation is the one softener in the picture: it lowers your taxable rental income without costing cash, so a property with heavy depreciation can produce cash flow while adding little to MAGI. The reverse is also true. A paid-off property with little depreciation throws off nearly every rent dollar straight into MAGI.

For 2026, the surcharge starts at $109,000 of MAGI for single filers and $218,000 for married couples filing jointly, measured on the 2024 return. Take a single retiree with $100,000 of other MAGI and $12,000 of net rental income. Total MAGI is $112,000, which crosses the first threshold and buys a year of surcharges. The rental income did not have to be large. It only had to be the dollars that crossed the line. That cliff structure is what makes rental income dangerous near a threshold: the surcharge is not proportional to the rental income, it is the full tier amount triggered by the last few thousand dollars.

The number that makes landlords wince

Here is where the scale becomes concrete, using published 2026 figures. A single filer with $150,000 of MAGI pays $405.80 a month for Part B plus a $37.50 a month Part D add-on, which runs roughly $2,885 a year above the standard premium for identical coverage. That filer did not need a windfall to get there. A pension, Social Security, modest IRA withdrawals, and one rental property stack up fast, and the rental income is often the piece nobody counted because it felt like a side activity rather than income. Medicare does not share that view. Rental income counts the same as wages for this purpose, dollar for dollar.

Two related traps deserve a line each. Selling a rental property is worse than renting it: the taxable gain from the sale lands in MAGI in the sale year, and the surcharge follows two years later, even though the cash is long spent or reinvested. And a life-changing event appeal on Form SSA-44 does not help with rental income, because buying or selling property is not one of the qualifying events. Retirement, divorce, death of a spouse, and loss of pension income qualify. A good rental year does not. If you are reading this after the fact, that last point stings, so I will say it plainly: there is no appeal for income that was real, even if it was a one-time event.

What you can actually do about it

Timing is the lever that works. Rental income is lumpy in ways you partly control: the year you replace a roof, the year you take a big repair deduction, and the year you sell all move MAGI in different directions. If you are two years out from Medicare or already on it, bunching deductible repairs into a high-income year and deferring a sale into a lower-income year can keep a given tax year under a threshold. Depreciation schedules and cost segregation studies change the annual MAGI picture too, but they are tax decisions with long tails, so run them past a tax professional before you let a Medicare threshold drive them.

If you are reading this and your premiums already jumped, check the return first. Make sure the rental figure on the return matches your records, and check whether a loss year or a suspended passive loss changed the number. And if your income has genuinely fallen since the lookback year for a qualifying reason, file the SSA-44. Rental income alone will not qualify you, but a retirement in the same period might, and the form allows more than one event to be listed. The difference between a surcharge you accept and one you appeal is often a single qualifying event hiding next to the rental income.

One more year to watch

The two-year lag cuts both ways, and that is worth remembering when the news is bad. A high rental year raises premiums for one year, then the calculation moves on to the next return. IRMAA recalculates every year from a new two-year-old return, so a single spike does not permanently reprice your Medicare. If the spike year rolls off and your MAGI falls back under the threshold, the surcharge falls away on its own. Landlords who track their MAGI year by year, the way they track occupancy, rarely get surprised twice.

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