Is Medicare Taxable? Premiums, Surcharges, and Deductions

Medicare benefits themselves are not taxable. The hospital stays, doctor visits, and prescription drugs the program pays for on your behalf are not income to you, and no dollar amount for the care you used gets reported on your return.¹ The tax questions people usually mean when they ask whether Medicare is taxable are different ones: how premiums affect the tax on Social Security, when income-based surcharges apply, the extra Medicare taxes higher earners owe, and when premiums can be deducted.

Why Benefits Aren’t Taxed

The IRS treats Medicare-covered care the same way it treats employer-provided health coverage — as a health benefit rather than a financial gain.¹ That holds whether the program pays for a routine office visit or a six-figure surgery. You receive no tax form for the value of care used during the year, and there is nothing to add to your return.

How Medicare Premiums Affect the Tax on Your Social Security

If you receive Social Security, your Part B and Part D premiums are typically deducted from your monthly check before it reaches you. When the IRS figures how much of your Social Security is taxable, though, it uses your gross benefit, the full amount before premiums or any other deductions come out.² Money that went straight to Medicare still counts.

The taxable share is determined using “combined income”: half of your Social Security benefits plus all other taxable income (wages, pensions, interest, dividends, capital gains) plus any tax-exempt interest.² Compare that total to the thresholds for your filing status:

Single filers: combined income between $25,000 and $34,000 makes up to 50% of benefits taxable; above $34,000, up to 85% is taxable.
Married filing jointly: combined income between $32,000 and $44,000 makes up to 50% taxable; above $44,000, up to 85%.³
Married filing separately while living with your spouse: up to 85% of benefits may be taxable regardless of income.

These thresholds do not adjust for inflation. Your Form SSA-1099, mailed each January, reports your gross benefit in Box 5, and that gross figure is what goes on your return.²

Income-Related Surcharges on Your Premiums

Higher-income enrollees pay a surcharge on top of the standard Part B and Part D premiums. It is called the Income-Related Monthly Adjustment Amount, or IRMAA. The standard monthly Part B premium for 2026 is $202.90, and IRMAA can push a total Part B premium as high as $689.90 per month.⁴

IRMAA uses your modified adjusted gross income from the tax return filed two years earlier. For 2026 premiums, that means your 2024 return. The tiers are:

$109,000 or less (single) / $218,000 or less (joint): no surcharge; you pay the standard $202.90.
$109,001–$137,000 (single) / $218,001–$274,000 (joint): $81.20 Part B surcharge plus $14.50 Part D surcharge.
$137,001–$171,000 (single) / $274,001–$342,000 (joint): $202.90 Part B surcharge plus $37.50 Part D surcharge.
$171,001–$205,000 (single) / $342,001–$410,000 (joint): $324.60 Part B surcharge plus $60.40 Part D surcharge.
$205,001–$499,999 (single) / $410,001–$749,999 (joint): $446.30 Part B surcharge plus $83.30 Part D surcharge.
$500,000 or more (single) / $750,000 or more (joint): $487.00 Part B surcharge plus $91.00 Part D surcharge.⁴

The two-year lookback can catch retirees whose income has since dropped. If you have had a life-changing event that reduced income, such as retirement, the death of a spouse, divorce, or involuntary job loss, you can ask the Social Security Administration to use a more recent tax return by filing Form SSA-44.⁵

The Additional Medicare Tax on High Earnings

On top of the regular 1.45% Medicare payroll tax, an extra 0.9% applies to earned income above a threshold that depends on filing status:⁶

Married filing jointly: $250,000
Married filing separately: $125,000
Single, head of household, or qualifying surviving spouse: $200,000

Employers begin withholding the 0.9% once your wages pass $200,000 in a calendar year, regardless of your filing status.⁶ A married couple filing jointly with two paychecks that each stay under $200,000 may still cross the $250,000 combined threshold and owe the tax at filing. A married-filing-separately taxpayer whose wages top $200,000 but whose threshold is only $125,000 is likely to owe more at filing than was withheld.

Self-employed individuals owe the same 0.9% on net self-employment income above the threshold and should build it into quarterly estimated payments. Everything reconciles on Form 8959.⁷

The Net Investment Income Tax

A separate 3.8% tax applies to investment income (interest, dividends, capital gains, rental income, royalties) above the same income thresholds: $200,000 single, $250,000 joint, $125,000 married filing separately. It was enacted with the Additional Medicare Tax under the Affordable Care Act, but it is not a payroll tax.⁸ The 3.8% applies to whichever is smaller: your net investment income, or the amount by which your MAGI exceeds the threshold.⁹ It is reported on Form 8960.

When You Can Deduct Medicare Premiums

Benefits are not taxable, but premiums can reduce your tax bill. The rules differ depending on whether you itemize or are self-employed.

Itemized Medical Expense Deduction

Premiums for Part B, Part D, and Medicare Advantage (Part C) are qualified medical expenses. You can deduct them on Schedule A, but only to the extent your total medical expenses exceed 7.5% of your adjusted gross income.¹⁰¹¹ Medigap premiums also qualify because they are health insurance covering medical care.

Part A is a special case. If you get premium-free Part A on the basis of work credits, the Medicare payroll tax you paid over your career is not a deductible medical expense. If you are not automatically entitled and pay a Part A premium — up to $565 per month in 2026 for people with fewer than 30 quarters of work history — that premium is deductible.¹¹¹²

Self-Employed Health Insurance Deduction

If you are self-employed with net profit, you can deduct Medicare premiums through the self-employed health insurance deduction on Schedule 1 of Form 1040. It is an adjustment to income, so it applies whether or not you itemize, and it directly reduces AGI.¹³ The same deduction is available to partners with net self-employment earnings and to more-than-2% S corporation shareholders.

The plan must be established under your business, and you cannot claim the deduction for any month you were eligible to participate in a subsidized employer health plan, including through a spouse’s employer. Premiums deducted on Schedule 1 cannot also be counted toward the itemized medical expense deduction.¹³ You calculate it using Form 7206.

Medicare and Health Savings Accounts

Enrolling in any part of Medicare ends your eligibility to contribute to an HSA. Starting with the first month you are enrolled, your contribution limit drops to zero.¹⁴ Part A, B, C, or D — any of them disqualifies you.¹⁵

If Medicare starts partway through the year, you prorate the annual limit. For 2026, HSA limits are $4,400 for self-only coverage and $8,750 for family coverage, with an additional $1,000 catch-up if you are 55 or older.¹⁶

The Retroactive Part A Trap

When you apply for Part A after age 65, coverage can be backdated up to six months, but never earlier than the month you turned 65. That retroactive effective date also retroactively ends your HSA eligibility for those months.¹⁴ Any HSA contributions made during those months become excess contributions, hit with a 6% excise tax each year the excess stays in the account.¹⁷

If you are still working past 65 and want to keep contributing, delay Medicare enrollment, including Part A. Claiming Social Security after 65 automatically triggers Part A, and that enrollment can be retroactive. To fix excess contributions, withdraw the excess amount and any earnings on it before your tax filing deadline.

Spending an HSA on Medicare Premiums

You cannot contribute once enrolled, but you can still spend what is already in the account. Withdrawals for qualified medical expenses stay tax-free at any age, and Medicare premiums for Parts A, B, C, and D count as qualified expenses once the account holder is 65 or older.¹⁴ Medigap premiums do not qualify. If you take HSA money out for non-medical reasons after 65, it is taxed as ordinary income but avoids the 20% penalty that applies before 65.

1
Internal Revenue Service. Publication 525, Taxable and Nontaxable Income
2
Internal Revenue Service. Publication 915, Social Security and Equivalent Railroad Retirement Benefits
3
Internal Revenue Service. IRS Reminds Taxpayers Their Social Security Benefits May Be Taxable
4
Centers for Medicare & Medicaid Services. 2026 Medicare Parts A and B Premiums and Deductibles
5
Social Security Administration. Request to Lower an Income-Related Monthly Adjustment Amount (IRMAA)
6
Internal Revenue Service. Topic No. 560, Additional Medicare Tax
7
Internal Revenue Service. Instructions for Form 8959, Additional Medicare Tax
8
Internal Revenue Service. Topic No. 559, Net Investment Income Tax
9
Office of the Law Revision Counsel. 26 U.S. Code 1411 – Imposition of Tax
10
Office of the Law Revision Counsel. 26 USC 213 – Medical, Dental, Etc., Expenses
11
Internal Revenue Service. Publication 502, Medical and Dental Expenses
12
Centers for Medicare & Medicaid Services. Medicare Deductible, Coinsurance, and Premium Rates for 2026
13
Internal Revenue Service. Instructions for Form 7206, Self-Employed Health Insurance Deduction
14
Internal Revenue Service. Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans
15
Office of the Law Revision Counsel. 26 U.S. Code 223 – Health Savings Accounts
16
Internal Revenue Service. Revenue Procedure 2025-19
17
Office of the Law Revision Counsel. 26 USC 4973 – Tax on Excess Contributions to Certain Tax-Favored Accounts and Annuities