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Why Are There Intermittent Spikes to 100% on the Rate on Next Dollar Tax Map?

Medicare Premiums are Represented on the Tax Map by Spikes that Show a 100% Effective Marginal Rate at the Point in Which Distributions Exceed Designated Thresholds.

For individuals aged 65 and older, Medicare premiums can increase at certain thresholds based on Modified Adjusted Gross Income.  These Income-Related Monthly Adjustment Amounts (IRMAA) are monthly surcharges based on the individual's income throughout the past two years.  

For Tax Clarity purposes, they are not taxes, per se, they are indicators that are based on the client information in the case. In addition, because the current IRMAA time frame is two years for income level purposes, the impact could be a surprise down the road. In essence, it is a valuable "warning" indicator.  These spikes can be eliminated by clicking the "Exclude Medicare Premium" box as noted below.    



One can also see the additional annual Medicare premiums as calculated for the case under the "Details" tab.