TaxWrenTax glossary · Updated
What is modified adjusted gross income (MAGI)?
Short answer
Adjusted gross income with certain items added back, such as excluded foreign income or tax-exempt interest. There is no single MAGI: each rule that uses it (the premium tax credit, IRA deduction limits, the net investment income tax) says what to add.
Modified adjusted gross income, or MAGI, starts from your adjusted gross income and adds back some income that AGI leaves out or some deductions that AGI subtracts. It is used so that income left out of AGI still counts toward some income limits, and each rule spells out its own version.
What each rule adds to AGI
| Rule | MAGI = AGI plus | Threshold (2026) |
|---|---|---|
| Premium tax credit (Marketplace health insurance) | Excluded foreign income, nontaxable Social Security benefits, tax-exempt interest | Depends on household size |
| Net investment income tax | The foreign earned income exclusion (and related adjustments) | $200,000 single, $250,000 joint |
| Traditional IRA deduction (if covered by a workplace plan) | AGI figured without the IRA deduction, plus the student loan interest deduction, foreign earned income and housing exclusions, the foreign housing deduction, excludable savings bond interest and excluded adoption benefits | Set each year |
| Senior deduction (2025 to 2028) | Foreign earned income excluded under section 911 and income excluded by residents of Puerto Rico and some US territories (sections 931 and 933) | $75,000 single, $150,000 joint |
The child tax credit ($200,000 single, $400,000 joint) and the SALT cap ($505,000) also phase out by modified AGI.
Example: the premium tax credit
A retired couple has AGI of $60,000, which includes $12,000 of taxable Social Security out of $36,000 received, and $3,000 of tax-exempt municipal bond interest. For the premium tax credit their MAGI is $60,000 + $24,000 (nontaxable Social Security) + $3,000 = $87,000. For the net investment income tax, with no foreign income, their MAGI is simply their AGI of $60,000.
Why it matters
Because benefits phase out by MAGI, a dollar of extra income near a threshold can cost more than your tax rate. Above $75,000, for instance, each extra dollar of MAGI reduces a single filer's senior deduction by 6 cents, so it raises taxable income by $1.06 rather than a dollar. Our Roth conversion calculator flags these thresholds.
Work it out
Related terms
- Adjusted gross income
- Your gross income minus the adjustments listed on Schedule 1 of Form 1040, such as deductible IRA and HSA contributions, student loan interest and the deductible part of self-employment tax. It is on line 11 of Form 1040.
- Net investment income tax
- A 3.8% tax on investment income such as interest, dividends, gains and rents, for people whose modified AGI is over $200,000 ($250,000 married filing jointly).
Frequently asked questions
What is modified adjusted gross income?
Adjusted gross income with certain deductions or exclusions added back. There is no single definition: each rule that uses MAGI (the premium tax credit, IRA limits, the net investment income tax, the senior deduction) lists what to add.
How do I calculate MAGI?
Start with your AGI (line 11 of Form 1040) and add the items the specific rule names. For the premium tax credit you add excluded foreign income, nontaxable Social Security benefits and tax-exempt interest; for the net investment income tax you generally add only the foreign earned income exclusion.
Is MAGI the same as AGI?
Often yes: if you have none of the items a rule adds back (no foreign earned income exclusion, no tax-exempt interest, no nontaxable Social Security), your MAGI for that rule equals your AGI.
Is MAGI higher or lower than AGI?
For the rules on this page MAGI is equal to or higher than AGI, because they add items back. The IRA deduction worksheet, for example, starts from AGI figured without the IRA deduction and adds back the student loan interest deduction.
Sources: IRS, Questions and answers on the premium tax credit (Q8); IRS Topic 559, Net investment income tax; IRS Publication 590-A, Worksheet 1-1 (modified AGI for the IRA deduction); P.L. 119-21, section 70103 (deduction for seniors). Figures come from our tax data files; see the methodology. All terms: tax glossary.