[Updated on December 11, 2024 after the release of the inflation number for November 2024. The next update will be on January 15, 2025.]
Seniors 65 or older can sign up for Medicare. The government calls people who receive Medicare beneficiaries. Medicare beneficiaries must pay a premium for Medicare Part B which covers doctors’ services and Medicare Part D which covers prescription drugs. The premiums paid by Medicare beneficiaries cover about 25% of the program costs for Part B and Part D. The government pays the other 75%.
What Is IRMAA?
Medicare imposes surcharges on higher-income beneficiaries. The theory is that higher-income beneficiaries can afford to pay more for their healthcare. Instead of doing a 25:75 split with the government, they must pay a higher share of the program costs.
The surcharge is called IRMAA, which stands for Income-Related Monthly Adjustment Amount. This applies to both Traditional Medicare (Part B and Part D) and Medicare Advantage plans.
According to the Medicare Trustees Report, 7% of Medicare Part B beneficiaries paid IRMAA. The extra premiums they paid lowered the government’s share of the total Part B and Part D expenses by two percentage points. Big deal?
MAGI
The income used to determine IRMAA is your Modified Adjusted Gross Income (MAGI) — which is your AGI plus tax-exempt interest and dividends from muni bonds — from two years ago. Your 2022 MAGI determines your IRMAA in 2024. Your 2023 MAGI determines your IRMAA in 2025. Your 2024 MAGI determines your IRMAA in 2026.
There are many definitions of MAGI for different purposes. The MAGI for subsidies on health insurance from the ACA marketplace includes untaxed Social Security benefits. The MAGI for IRMAA doesn’t include untaxed Social Security benefits. If you read somewhere else that says that untaxed Social Security benefits are included in MAGI, they’re talking about a different MAGI, not the MAGI for IRMAA.
You can use Calculator: How Much of My Social Security Benefits Is Taxable? to calculate the taxable portion of your Social Security benefits.
As if it’s not complicated enough while not moving the needle much, IRMAA is divided into five income brackets. Depending on the income, higher-income beneficiaries pay 35%, 50%, 65%, 80%, or 85% of the program costs instead of 25%. As a result, they pay 1.4 times, 2.0 times, 2.6 times, 3.2 times, or 3.4 times the standard Medicare premium.
The threshold for each bracket can cause a sudden jump in the monthly premium amount you pay. If your income crosses over to the next bracket by $1, all of a sudden your Medicare premiums can jump by over $1,000/year. If you are married filing a joint tax return and both of you are on Medicare, $1 more in income can make the Medicare premiums jump by over $1,000/year for each of you.
* The last bracket on the far right isn’t displayed in the chart.
So if your income is near a bracket cutoff, see if you can manage to keep it down and make it stay in a lower bracket. Using the income from two years ago makes it more difficult to manage.
2024 IRMAA Brackets
The income on your 2022 IRS tax return (filed in 2023) determines the IRMAA you pay in 2024.
| Part B Premium | 2024 Coverage (2022 Income) |
|---|---|
| Standard | Single: <= $103,000 Married Filing Jointly: <= $206,000 Married Filing Separately <= $103,000 |
| 1.4x Standard | Single: <= $129,000 Married Filing Jointly: <= $258,000 |
| 2.0x Standard | Single: <= $161,000 Married Filing Jointly: <= $322,000 |
| 2.6x Standard | Single: <= $193,000 Married Filing Jointly: <= $386,000 |
| 3.2x Standard | Single: < $500,000 Married Filing Jointly: < $750,000 Married Filing Separately < $397,000 |
| 3.4x Standard | Single: >= $500,000 Married Filing Jointly: >= $750,000 Married Filing Separately >= $397,000 |
Source: Medicare Costs, Medicare.gov
The standard Part B premium is $174.70 in 2024. Higher-income Medicare beneficiaries also pay a surcharge for Part D. The income brackets are the same. The Part D IRMAA surcharges are relatively smaller in dollars.
2025 IRMAA Brackets
The income on your 2023 IRS tax return (filed in 2024) determines the IRMAA you pay in 2025.
| Part B Premium | 2025 Coverage (2023 Income) |
|---|---|
| Standard | Single: <= $106,000 Married Filing Jointly: <= $212,000 Married Filing Separately <= $106,000 |
| 1.4x Standard | Single: <= $133,000 Married Filing Jointly: <= $266,000 |
| 2.0x Standard | Single: <= $167,000 Married Filing Jointly: <= $334,000 |
| 2.6x Standard | Single: <= $200,000 Married Filing Jointly: <= $400,000 |
| 3.2x Standard | Single: < $500,000 Married Filing Jointly: < $750,000 Married Filing Separately < $394,000 |
| 3.4x Standard | Single: >= $500,000 Married Filing Jointly: >= $750,000 Married Filing Separately >= $394,000 |
Source: Medicare Costs, Medicare.gov
If you’re married filing separately, you may have noticed that the bracket for 3.2x standard goes down in 2025 compared to 2024. That’s not a typo. If you look up the history of that bracket (under heading C), you’ll see it went down from one year to the next. That’s the law. It puts more people married filing separately with a high income into the 3.4x standard bracket.
The standard Part B premium is $185/month in 2025. Higher-income Medicare beneficiaries also pay a surcharge for Part D. The income brackets are the same. The Part D IRMAA surcharges are relatively smaller in dollars.
I also have the tax brackets for 2025. Please read 2025 Tax Brackets, Standard Deduction, Capital Gains, etc. if you’re interested.
2026 IRMAA Brackets
We have three data points right now out of 12 needed for the IRMAA brackets in 2026 (based on 2024 income). We can only make some preliminary estimates and plan for some margin to stay clear of the cutoff points.
If annualized inflation from December 2024 through August 2025 is 0% (prices staying flat at the latest level) or 3% (approximately a 0.25% increase every month), these will be the 2026 numbers:
| Part B Premium | 2026 Coverage (2024 Income) 0% Inflation | 2026 Coverage (2024 Income) 3% Inflation |
|---|---|---|
| Standard | Single: <= $108,000 Married Filing Jointly: <= $216,000 Married Filing Separately <= $108,000 | Single: <= $109,000 Married Filing Jointly: <= $218,000 Married Filing Separately <= $109,000 |
| 1.4x Standard | Single: <= $135,000 Married Filing Jointly: <= $270,000 | Single: <= $137,000 Married Filing Jointly: <= $274,000 |
| 2.0x Standard | Single: <= $169,000 Married Filing Jointly: <= $338,000 | Single: <= $171,000 Married Filing Jointly: <= $342,000 |
| 2.6x Standard | Single: <= $202,000 Married Filing Jointly: <= $404,000 | Single: <= $204,000 Married Filing Jointly: <= $408,000 |
| 3.2x Standard | Single: < $500,000 Married Filing Jointly: < $750,000 Married Filing Separately < $392,000 | Single: < $500,000 Married Filing Jointly: < $750,000 Married Filing Separately < $391,000 |
| 3.4x Standard | Single: >= $500,000 Married Filing Jointly: >= $750,000 Married Filing Separately >= $392,000 | Single: >= $500,000 Married Filing Jointly: >= $750,000 Married Filing Separately >= $391,000 |
Higher inflation raises the IRMAA brackets in general, except for the 3.2x standard for married filing separately, which goes down with inflation and puts more people married filing separately with a high income into the 3.4x standard bracket.
Because the formula compares the average of 12 monthly CPI numbers over the average of 12 monthly CPI numbers in a base period, even if prices stay the same in the following months, the average of the next 12 months will still be higher than the average in the previous 12 months.
To use exaggerated numbers, suppose gas prices went up from $3/gallon to $3.50/gallon over the last 12 months. The average gas price in the last 12 numbers was maybe $3.20/gallon. When gas price inflation becomes 0%, it means it stays at the current price of $3.50/gallon. The average for the next 12 months is $3.50/gallon. Brackets based on an average gas price of $3.50/gallon in the next 12 months will be higher than brackets based on an average gas price of $3.20/gallon in the previous 12 months.
If you really want to get into the weeds of the methodology for these calculations, please read this reply on comment page 2 and this other comment on page 4.
Roth Conversion Tools
When you manage your income by doing Roth conversions, you must watch your MAGI carefully to avoid accidentally crossing one of these IRMAA thresholds by a small amount and triggering higher Medicare premiums.
I use two tools to help with calculating how much to convert to Roth. I wrote about these tools in Roth Conversion with TurboTax What-If Worksheet and Roth Conversion with Social Security and Medicare IRMAA.
Nickel and Dime
The standard Medicare Part B premium is $185/month in 2025. A 40% surcharge on the Medicare Part B premium is $888/year per person or $1,776/year for a married couple both on Medicare.
In the grand scheme, when a couple on Medicare has over $212,000 in income, they’re already paying a large amount in taxes. Does making them pay another $1,776 make that much difference? It’s less than 1% of their income but nickel-and-diming just makes people mad. People caught by surprise when their income crosses over to a higher bracket by just a small amount are angry at the government. Rolling it all into the income tax would be much more effective.
Oh well, if you are on Medicare, watch your income and don’t accidentally cross a line for IRMAA.
IRMAA Appeal
If your income two years ago was higher because you were working at that time and now your income is significantly lower because you retired (“work reduction” or “work stoppage”), you can appeal the IRMAA initial determination. The “life-changing events” that make you eligible for an appeal include:
- Death of spouse
- Marriage
- Divorce or annulment
- Work reduction
- Work stoppage
- Loss of income from income producing property
- Loss or reduction of certain kinds of pension income
You file an appeal with the Social Security Administration by filling out the form SSA-44 to show that although your income was higher two years ago, you had a reduction in income now due to one of the life-changing events above. For more information on the appeal, see Medicare Part B Premium Appeals.
Not Penalized For Life
If your income two years ago was higher and you don’t have a life-changing event that makes you qualify for an appeal, you will pay the higher Medicare premiums for one year. The IRMAA surcharge goes into the Medicare budget. It helps to keep Medicare going for other seniors on Medicare.
IRMAA is re-evaluated every year as your income changes. If your higher income two years ago was due to a one-time event, such as realizing capital gains or taking a large withdrawal from your IRA, when your income comes down in the following year, your IRMAA will also come down automatically. It’s not the end of the world to pay IRMAA for one year.
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Diane B says
Please respect Harry Sit’s incredibly valuable contribution to our knowledge about IRMAA and closely related topics, and move your political opinions to another website. By posting them here, you will discourage many of Harry’s grateful readers who need his wisdom but resent being forced to weed through off-topic comments to get to “the good stuff.” Harry deserves much better than that.
Teresa Durden says
I totally agree!
Bev L says
Is it safe to use the IRMAA income tiers from 2025 as a safeguard for 2026 IRMAA limits?
I want to stay in the 2.0 tier. MFJ income was $334,000 for that tier in2023 and projected to be $338,000 for 2024 income. Comments appreciated.
Harry Sit says
It’s safe to use the 2025 tiers for 2026. The current estimate of $338,000 is also quite safe.
Mike says
I find myself at times caught up in off topic commenting and agree with the need to temper OT comments.
Terry says
Harry, When will you be putting out your first estimate of 2027 IRMAA based on 2025 income? Thanks for all your work on this. I am extremely glad that I found your site.
Harry Sit says
I’ll start covering 2027 based on 2025 income on January 15.
steve says
Thanks for this great resource. In the past I’ve been making a guesstimate, but with these “tripwire” IIRMA brackets that is quite hazardous.
Jeff Enders says
This article may make for a great discussion on the value of Roth Conversions… any math gurus here willing to state an opinion?
https://www.financialplanningassociation.org/learning/publications/journal/SEP24-net-present-value-analysis-roth-conversions-OPEN
appears the basic premise is that unless you expect tax rates go up during your lifetime and / or your heirs are expected to be in a higher tax bracket than you are during the 10 years they have to liquidate the inherited IRA, Roths conversions may not be an effective option….
I am already of the belief that if you are going to consume your Trad IRA during your lifetime – either by spending it or donating it, then Roth Conversions don’t make a lot of sense… and that is 77% of taxpayers who have a Trad IRA.
Anyone have a thought and can you shoot any holes in the author’s assumptions?
Gary says
Jeff, love the article for being a different way of looking at the problem. However, It is difficult to generalize the article’s conclusions for personal use. Some examples:
1) Starting Situations – we all come with varying ages, income levels, income streams, tax returns, asset allocations, taxable/tax deferred/Roth accounts, etc. We all need to model our own situation before starting to chart any financial strategy.
2) Taxes not Tax Rates – I am seeing more folks are alluding to not just tax rates but to more general tax considerations in Roth analysis. IRMAA penalties, social security taxation, dividend rates, asset allocations over time, etc. are also needed.
3) Mortality Assumptions – Wife and I model two extreme scenarios: jointly living to age 100 as well as one spouse dying next year. The article mostly relies on fixed mortality assumptions minimizing mortality risk considerations.
4) Medical Care Expenses – Future, potentially large, medical expenses have both timing and cost risk, but also might be tax deductible. Thus, they can offset some future RMDs and lower effective taxes.
So great article, but lots of detailed work to get a clear financial picture for yourself. And even then, all models seem to point to ROTH decisions as being decision making under great uncertainty. Good Luck Everyone!
Nancy Memmel says
Jeff;
Interesting article.
I agree with you that for someone intending to consume their t-IRA over their lifetime, conversions could be a high effort way to merely break even, or worse, or a high cost way to donate to charity. The initial attraction of the Roth was in the future tax flexibility it confers. Then the stretch feature of IRAs was eliminated and that change boosted it’s allure.
The article does a first principal analysis of how long a current tax hit will take to be bested by future tax advantages, assuming a lot of things that have to be assumed to make projections. I don’t see any holes in their assumptions; we have to make decisions and take our chances in this as in the rest of life.
If you are looking at the specifics of your own situation, you probably have a better than 50/50 chance of being right about your future situation ( but not 100%, surely) as for income and maybe mortality, especially if one of a couple has a current diagnosis.
While I don’t know future rates, I doubt that we’ll go from a progressive tax structure to, say, a flat tax any time soon.
Looking at the national debt, I would surmise that while tax rates might go down in certain windows of time the government is going to have to raise funds, by hook or by crook.
A VAT-like tax could negate income tax advantages of conversion, (but for a proposal in the recent past that we have a VAT-like tax ALONG WITH the current income tax for a period of 7 years, at which time Congress would decide which one is better and end the other… Sure they would…)
On the other hand, if I converted and subsequent rates were permanently lower I’d still have the solace of lower ongoing rates. I guess I could then agonize over how much more we would have had if we hadn’t converted , but if the changes happen when the original decision is in the rear view mirror, I probably wouldn’t.
RobI says
Good article and useful in depth financial calculations which look sound. I’m inclined to follow their advice and not convert. However there is the non-financial factor of creating a simpler future financial life for my spouse so she does not hit higher IRMAA single filer breakpoints if/when that situation arises. I’m curious if others have views on that.
The footnotes and references also provided some of the best insights.
1. The companion paper by the same author entitled “IRMAA – Resistance is Futile” is directed at answering the question of ROTH conversions vs IRMAA using similar NPV methods. Paper can be found here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4700784.
2. Note 12 indicates that the possible impact of Inheritance/Estate Taxes both Federal (but also state level taxes with lower thresholds of estate value) were not considered. This factor may matter to heirs as much as income taxes in some states.
Nancy Memmel says
Robl;
The abstract of the IRMAA-now -or- later paper is available, but the paper itself is not openable or downloadable ( at least not by me..)
At the point that you retire (or cut hours or have another Life Changing Event as enumerated by the SSA) there is a possibility of reducing IRMAA based on your 2-years -go income because of the event.
I assume the paper didn’t consider that as it would be kind of a one -off where all the stars must align to make it a go, but it could remove some IRMAA cost if planned for.
For example, if you are doing a glide into full retirement over a number of years, progressively reducing wage income, I think you could file multiple reconsiderations based on declining wages year over year. We haven’t done this, so there maybe a gotcha limiting the reconsideration requests, but it appears to merely depend on the IRMAA MAGI being lower than 2 years prior and the fact that income due to the parameter sited in the request ( reduced wages, ending work, pension collapsing, etc) in fact decreases.
The Wizard says
McQ, the author of that paper, is well known on the BH forum.
One goal of Roth converting is to develop a flexible pile of free money for infrequent large expenses.
Roth conversion is not a binary choice; neither 0% nor 100% is the right answer.
The right answer is closer to what I did while defending SS to age 70: levelizing your AGI with an inflation adjustment each year.
This means Roth converting a sum approximately equal to your age 70 SS + your projected RMD while still in your 60s.
I’m 74 now with ruffly $50k SS and $40k RMD. So if I was ten years younger, I’d be aiming for ruffly a $90k Roth conversion this year.
But I’m finished with larger Roth conversions now that those other streams are on…
The Wizard says
DEFERRING, not defending!!
Robert Hoppe says
Wizard. My wife and I are both 71 and I have been doing Roth IRA conversions for us since 2022, and will continue to do so through 2025. Since we are required to start RMDs in 2026 which is the year we turn 73, we will be limited in terms of the extent of Roth IRA conversions we can do from 2026 onward, since we have to continue maintaining our MAGI level each year under the IRMAA threshold to avoid the 1.4x premiums factor two years henceforth. I have supported the Roth IRA conversions idea to date in order to reduce the tax liability for our sons when they inherit. I believe that Congress will vote to increase tax rates in the future in order to partially offset the huge federal deficits. Lets face it. Our kids generation has it a lot tougher than we did when considering the current cost of living, especially housing, insurance, and food. Therefore, minimizing their tax liability by inheriting Roth IRA money vs traditional IRA money, is a great way to help them out.
Free says
Love this article and the projections for the future it provides based on the data available.
I have tried for months, to no avail, to see if anyone done similar forecast for the INCOME LEVELS that will comprise each Tax Bracket in the future.
For example, in 2021 the 24% tax bracket topped up at $329,850. In 2024 the 24% income bracket moved up to $393,900. That is a big change. What is it based on, (CPI? this is 19% in three years!). Can that be use to forecast future years?
I basically would like to know if a 500k RMD in 2030 will be in the %22, 24% or 33% bracket.
Thx.
Jeff Enders says
Free – the tax brackets, assuming no change in tax law are adjusted for inflation every year.
the numbers you quoted was over 4 years, not 3 years, as the 2024 24% tax bracket ends at $383,900 and that will be $394,600 in 2025.
For my own assumptions, I just use a 2.5% adjustment each year, so if I assume that TJCA is extended, then 2030 is ~$446,000. If TJCA is not extended, then I am using $332,00 for 2030. it is a BIG difference.
it’s hard to answer your question which tax bracket $500k RMD will land you in 2030 – it depends on what Congress and Trump do with the expiration of TCJA by the end of 2025.
Nancy Memmel says
Free;
The TCJA brackets inflate based on the chained CPI. Pre 2018 they inflated based on the unchained CPI. Coming up with income brackets requires you to assume an inflation rate for each year.
That 500 K RMD would be added to any other income you have and deductions ( and exemptions if the tax regime reverts ) dependent on your filing status would apply to get to the marginal bracket. Assuming no other income, single, standard deduction , I’d expect you’re looking at 32% if the TCJA regime is extended or 31% IF NOT.
If you have a couple 100K of income before the RMD you would be in the 33% or 35% bracket. (Remember, the rates revert, too, if the TCJA sunsets, so you’d have 10%, 15%, 25%, 28%, 31% and 33% instead of the current 10%, 12%, 22%, 24%, 32%, and 35%, but by 2030 who knows what the brackets would be.)
The Wizard says
A $500k RMD is large.
So you have around $10,000,000 in tax deferred. Neato!
It’s fun being rich; welcome to the club…
Free says
Thanks, Jeff.
I understand it’s difficult to predict what Congress will do, so I was trying to focus on a few fixed assumptions and concentrate on the most probable tax bracket for me.
Where does the 2.5% come from? Is it based on a government index or target CPI?
I suppose I can just create a table that extends the current dollar ranges to 2030 and beyond.
Jeff Enders says
Free – as stated, the 2.5% is my own, personal assumption of inflation over time.
Free says
Thank you, Nancy, for the detailed response. This is exactly the answer I was looking for: “The TCJA brackets inflate based on the chained CPI.”
I’m aware that all other income will factor into determining tax liability and the potential impact of the TCJA. With that in mind, I’m planning to max out the 24% bracket for Roth conversions to stay in the 24% marginal rate by 2030.
I see this as a win, even without knowing future tax rates, since my 401(k) accumulation phase occurred with income taxed at the 33% marginal rate for most years.
Cheers!
Harry Sit says
This is the last update in 2024. November CPI was slightly lower than the previous month. The drop wasn’t enough to affect the projected 2026 brackets except the 3.2x tier, which went down a notch. It’ll go back up if the CPI goes back up.
RobI says
A bit of an academic question. How can month over month price increase but CPI itself fall slightly?
Harry Sit says
News headlines usually report seasonally adjusted inflation. We only care about the unadjusted index here. The month over month price didn’t increase for our purpose.
RobI says
Thanks, as I suspected. Interestingly, looking back over several years, Nov and Dec unadjusted CPI typically falls vs October. This makes it harder to predict annual IRMAA change until we see Jan-Mar data. But it also means this months 0% inflation bracket forecast is likely conservative.
Vince says
Does the December CPI change the amount of negative inflation required to reduce the 2026 joint $216,000 to $214,000. I’m guessing that with inflation not under control, the disaster required to reduce the 0% figure is not probable and we can safely use the $216k.
Thanks to any smart person that can run the figures if Harry is busy. I’m sure I’m worrying for nothing but these Roth conversions are frustrating.
RobI says
I calculated the unrounded single person number as $107,577. That is very close to where it drops to $107,000 and $214,000 MFJ. About -0.1% annual inflation would make it drop down to that level. My personal take is if you are even slightly stressing about it, use the lower $214k number, as the possible long run difference is minor.
Robert Hoppe says
Robi. I’m personally aiming for not exceeding $210K for the 2024 IRMAA MAGI bracket for MFJ (which relates to Medicare premiums in 2026), since we really don’t know the level of 2024 year-end dividends and capital gain distributions will be until we receive the 1099-DIV statements in the mail towards the end of Jan 2025. Brokerage firms may post estimated year-end dividends and capital gain distributions to their websites around mid-Dec, but that doesn’t give us much time to react in terms of determining any Roth IRA conversions during the 2nd half of Dec 2024. I’m estimating 2024 dividends and capital gain distributions for 2024 based on our 2023 amounts plus 10%, since we have virtually the same taxable account investments in 2024 that we had in 2023.
RobI says
Robert Hoppe – Good point. I’m doing the same exercise myself and also leave a buffer.
Vanguard just published estimated fund dividends and cap gains per share amounts yesterday. https://advisors.vanguard.com/content/dam/fas/pdfs/FYEEST.pdf
Other brokers may be doing similar. I came across this useful link on Bogleheads forum.
https://www.mutualfundobserver.com/discuss/discussion/62752/2024-capital-gains-distribution-estimates
Robert Hoppe says
Thanks Robl. The Vanguard link shows the expected 2024 dividends and capital gain distributions. However, both the Primecap Odyssey Funds link (estimate as of 9/30/2024) and the Schwab link show only capital gain distributions for 2024.
GeezerGeek says
There is more of a risk in assuming a specific inflation rate if the inflation rate you assume is near an IRMAA breakpoint. I define a breakpoint as the rate of inflation rate that will change a bracket. If you assume an inflation rate of 2.5% and the breakpoint is 2.4%, then your assumption is more at risk than if the breakpoint is 1.5%.
I’ve created a table that shows the breakpoints for the brackets. I’m only showing the brackets for singles so multiply by two to get the married filing jointly brackets. This table was calculated using the CPI for September, October, and November and assuming the stated inflation rate for the rest of the year.
‘1.4 ‘2.0 ‘2.6 ‘3.2
0.00% ‘108,000 ‘135,000 ‘169,000 ‘202,000
0.02% ‘ ‘ ‘ ‘1,000
0.19% ‘ ‘1,000
1.02% ‘ ‘ ‘1,000
1.58% ‘ ‘ ‘ ‘1,000
2.55% ‘ ‘1,000
2.73% ‘1,000
2.90% ‘ ‘ ‘1,000
3.15% ‘ ‘ ‘ ‘1,000
4.69% ‘ ‘ ‘ ‘1,000
4.77% ‘ ‘ ‘1,000
4.87% ‘ ‘1,000
5.66% ‘1,000
6.25% ‘ ‘ ‘ ‘1,000
(Tables are not supported in comments so this may not post as I have tried to format it. I added the ‘ marks as a delimiter if anyone wants to paste it in Excel)
Note that the brackets do not move in sync, so you only need to focus on the bracket that you are targeting and ignore the breakpoints in the other brackets.
You can use the above table to calculate the brackets for any inflation rate between 0% to 6.5% by adding the increases of breakpoints above that inflation rate to the 0% bracket. So, if you want to calculate the brackets for a 3% rate of inflation, the 1.4 bracket would be 108,000 + 1,000 = 109,000; 2.0 bracket is 135,000 + 1,000 +1,000 = 137,000; 2.6 bracket is 169,000 + 1,000 + 1,000 = 171,000; and 3.2 bracket is 202,000 + 1,000 + 1,000 = 204,000. Those numbers agree with Harry’s 3% projection.
Note that the 3% rate is near the breakpoints for the 2.6 (0.1 % higher) and 3.2 (0.15% lower) brackets.
I think my math is correct, but it would be good for someone to validate it.
Thanks!
GeezerGeek says
Yep, comments destroyed my table formating so you will have to paste the table in Excel using the ‘ mark as a delimiter to see it.
GeezerGeek says
Here is another copy of the table that uses tabs for formating. It will look out of line here but if you copy and paste it in Note Pad, it will format correctly.
1.4 2.0 2.6 3.2
0.00% 108,000 135,000 169,000 202,000
0.02% 1,000
0.19% 1,000
1.02% 1,000
1.58% 1,000
2.55% 1,000
2.73% 1,000
2.90% 1,000
3.15% 1,000
4.69% 1,000
4.77% 1,000
4.87% 1,000
5.66% 1,000
6.25% 1,000
GeezerGeek says
Sorry, but Comments stripped out all of my tabs so you can’t post the note in Note Pad to see the table.