Medicare, Charitable Strategies, and Smart Tax Moves for 2026 and Beyond
As we approach the end of the year, many successful professionals and retirees across Hampton Roads are finalizing tax and financial planning decisions that will ripple well into 2026 and beyond. In Part 2 of our year-end planning series, we’ll focus on several commonly overlooked, but highly impactful areas:
- Medicare IRMAA surcharges
- Charitable giving strategies
- Health Savings Accounts (HSAs)
- Retirement Plan Contributions
- Virginia 529 Education Planning
- Estate Planning and Family Communication
These are the types of strategies we routinely review with high-income households before December 31.
Medicare & IRMAA: A Hidden “Tax” on High Earners
What Is IRMAA?
IRMAA stands for Income-Related Monthly Adjustment Amount. It’s an additional premium imposed on Medicare Part B and Part D when your income exceeds certain thresholds.
In plain English, The more income you report, the more you pay for Medicare.
Most retirees never write a check for this surcharge. Instead, IRMAA is automatically deducted from Social Security benefits, quietly reducing monthly income.
Importantly, IRMAA applies whether or not you are still working, and even if the income spike was temporary.
How Much Can IRMAA Cost?
While Medicare Part A has no income-based surcharge, Part B and Part D absolutely do.
To keep things simple, here are approximate examples:
- Single filer over $106,000 → Around $87/month additional premium
- Married filing jointly over $212,000 → Around $87/month per person or $175/mo as a couple
- Single filer over ~$133,000 → Around $220/month
- Married filing jointly over ~$266,000 → Around $440/month combined
- Highest tier:
- Singles over ~$500,000 → Around $530/month
- Couples over ~$750,000 → Around $1,060/month
Over the course of a year, IRMAA can quietly cost affluent retirees thousands of dollars.
Planning Opportunities to Reduce or Eliminate IRMAA
IRMAA is calculated using a two-year lookback. That means income earned in 2025 determines Medicare premiums in 2027.
Key planning considerations:
- Large bonuses
- Stock option exercises
- Restricted stock vesting
- Roth conversions
- Asset sales
If elevated income was caused by a one-time life event, IRMAA may be appealable through the Social Security Administration.
Before year-end, it’s worth reviewing whether strategic income timing or charitable planning could keep you below the next IRMAA tier.
Charitable Giving Strategies That Improve Tax Efficiency
Donate Appreciated Securities Instead of Cash
One of the most effective charitable strategies we use with clients is gifting appreciated securities, such as stocks, ETFs, or mutual funds, directly to charity.
Why this works:
- You receive a deduction for the full market value
- You avoid capital gains tax entirely
- The charity sells the assets and receives the funds
Most established charities can easily accept these contributions. This single strategy often outperforms writing a check.
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Qualified Charitable Distributions (QCDs) from an IRA
If you’re 70½ or older, you can donate directly from a traditional IRA to a qualified charity.
Benefits include:
- The distribution never counts as income
- It can satisfy Required Minimum Distributions (RMDs)
- Especially powerful for retirees using the standard deduction
For most high-income retirees, QCDs are far more tax-efficient than withdrawing IRA funds and donating separately.
Bunching Charitable Deductions
Roughly 90% of taxpayers now take the standard deduction. For 2025, that’s approximately:
- $16,000 single
- $31,500 married filing jointly
If your annual giving doesn’t exceed these thresholds, consider bunching several years of donations into one year. This can allow you to itemize periodically and capture larger deductions without increasing total giving.
Planning for Bonuses, Stock Compensation, and Windfalls
If you received, or expect to receive, a large bonus, equity compensation, or other windfall, review your withholding carefully.
High earners are often surprised by:
- Underpayment penalties
- Required quarterly estimated tax payments
Year-end is the last opportunity to course-correct.
Health Savings Accounts: One of the Best Tax Tools Available
Why We’re Big Fans of HSAs
When paired with a high-deductible health plan, HSAs offer triple tax advantages:
- Contributions are deductible
- Growth is tax-deferred
- Withdrawals for qualified medical expenses are tax-free
Unused balances roll forward indefinitely and can eventually be invested.
At age 65, HSAs effectively function like a traditional IRA, without penalties. They can even reimburse Medicare premiums, including IRMAA surcharges.
2025 HSA Contribution Limits
- Individual: $4,300
- Family: $8,550
- Age 55+ catch-up: +$1,000
There are no income limits, making HSAs one of the few remaining deductions available to high-income households.
Maximize Employer Retirement Plan Contributions
If cash flow allows, consider back-loading contributions to your employer retirement plan before year-end.
2025 limits:
- $23,500 standard
- $31,000 if age 50+
Some employers allow you to temporarily direct a large percentage, or even 100%, of pay into your plan for the final paychecks of the year.
Virginia 529 Plans: A Powerful State-Tax Strategy
For families planning future education expenses, Virginia’s 529 plan is among the strongest in the country.
Key benefits:
- State tax deduction of up to $4,000 per account per year
- Excess contributions carry forward
- Funds can be used for college, trade schools, and more
Gifting Rules and Super-funding
- Annual gift exclusion: $19,000 per recipient
- You can “superfund” a 529 with up to $95,000 in one year, treating it as if it were made evenly over a fifth over a 5-year period.
- If funds go unused, beneficiaries can be changed. Or up to approximately $35,000 may eventually be rolled into a Roth IRA for the child (subject to rules).
Review Estate Planning After Major Life Events
Marriage, divorce, births, deaths, asset purchases, or sales can all impact your estate plan.
Even without changes, we generally recommend a review every 7–10 years to account for evolving laws and tax rules.
A Final Year-End Thought: Have the Family Conversation
As families gather over the holidays, consider a relaxed conversation about:
- Where important documents are located
- Who to contact in an emergency
- General intentions – not dollar amounts
These conversations often prevent confusion and stress later.
Final Thought from Wealthway Financial Advisors
Year-end planning isn’t about reacting. It’s about positioning. With the right strategies in place before December 31, you can reduce taxes, protect income, and create clarity for the year ahead.
If you’d like help evaluating which of these strategies apply to your situation here in Hampton Roads, now is the time to act.