If I asked how you plan to create income in retirement, your answer probably involves your retirement savings and Social Security. And if I asked about health insurance, it’s likely Medicare once you turn 65.

But here’s what most people don’t consider: both of these involve federal benefits, and most people don’t fully understand how they’re taxed or what determines the premiums.

In Episode 16 of The Groundwork, Harris Evans, CFP® walks through two retirement planning essentials: how Social Security income is taxed through Provisional Income, and how Medicare premiums are determined through IRMAA.

SOCIAL SECURITY & PROVISIONAL INCOME

For many retirees, Social Security feels like a safety net, income they’ve earned and can finally count on. But Social Security is not automatically tax-free.

The IRS uses a formula called Provisional Income to determine how much of your Social Security benefit is taxable. It is calculated as:

Your Adjusted Gross Income (AGI)
Plus any tax-exempt interest (such as from municipal bonds)
Plus 50% of your Social Security benefit
That total determines how much of your benefit becomes taxable. What surprises most people is how compressed—and how low—these thresholds are. They are not indexed for inflation.

For 2026:

Filing single: if your Provisional Income exceeds $34,000, up to 85% of your Social Security benefit is taxable.
Married filing jointly: if your combined Provisional Income exceeds $44,000, up to 85% of your benefit is taxable.
It doesn’t take much—a pension, an IRA withdrawal, part-time income—to push into the 85% range. Strategies exist to help reduce the impact, but they require intentional planning and time.

IRMAA – UNEXPECTED MEDICARE PREMIUM HIKES

IRMAA stands for Income-Related Monthly Adjustment Amount. It determines what you pay for Medicare Part B and Part D.

Unlike Social Security taxation, IRMAA isn’t about how much of something is taxed. It’s about your actual monthly premium increasing.

IRMAA is based on your Modified Adjusted Gross Income and uses a two-year lookback. What you earn in 2024 determines what you pay in 2026. That delayed impact catches many people off guard.

The most common mistake: someone completes a large Roth conversion without considering the IRMAA consequences. They successfully reduce future taxes, but accidentally spike Medicare premiums two years later. Once a higher IRMAA bracket is triggered, the increase can be substantial. 

PLANNING OPPORTUNITIES

Retirement tax planning isn’t just about how much you have. It’s about:

Managing Provisional Income

Avoiding unnecessary IRMAA spikes

Planning for the Widow or Widower Tax shift (covered in Episode 15)

Being diversified across Time, Type, and Tax (covered in Episode 14)

For those in retirement or approaching it, there is often a meaningful window to take action, repositioning assets, timing Roth conversions carefully, and coordinating income sources to reduce long-term tax exposure. 

If you’re approaching retirement and want to make sure you’re not stepping on any tax landmines, I’d be glad to walk through it with you.

You can also find the full Provisional Income tax brackets in my Tax Reference Guide, a simple resource I put together to help you see exactly where you stand.