What is Modified Adjusted Gross Income (MAGI)?

Modified Adjusted Gross Income (MAGI) is your AGI with specific deductions added back, such as student-loan interest, foreign-earned income exclusion, and IRA deductions. There is no single MAGI formula - each tax provision (Roth IRA limits, ACA subsidies, IRMAA, Net Investment Income Tax) uses its own add-back rules.

Detailed definition

Modified Adjusted Gross Income is not a single number but rather a family of numbers, each tailored to a specific tax provision. The IRS uses different MAGI definitions for Roth IRA eligibility, Traditional IRA deductibility, the Affordable Care Act premium tax credit, the Net Investment Income Tax, Medicare IRMAA (income-related premium surcharges), and others.

For most taxpayers MAGI equals AGI because the typical add-backs (foreign-earned income exclusion, certain Puerto Rico income, Series EE bond interest used for education) do not apply. But for high earners, expats, or anyone using the student loan interest deduction, MAGI for the Roth IRA add-backs that deduction back to AGI.

The provision that uses MAGI most aggressively is Medicare IRMAA, which determines Medicare Part B and Part D premium surcharges for retirees. IRMAA uses MAGI from two years prior - so retirees often plan Roth conversions carefully to avoid pushing into a higher IRMAA bracket.

The Net Investment Income Tax (NIIT) is a 3.8% surtax on investment income that kicks in once MAGI exceeds $200,000 single or $250,000 MFJ. The thresholds have not been indexed for inflation since the tax was enacted in 2013, so more taxpayers fall into NIIT every year. For NIIT purposes, MAGI is AGI plus the foreign-earned income exclusion (Form 2555), making expat planning especially careful. The surtax applies to the lesser of investment income or the amount over the threshold, so a one-time gain that doubles your MAGI can trigger a meaningful additional bill.

For ACA premium tax credit purposes, MAGI is AGI plus nontaxable Social Security, tax-exempt municipal bond interest, and foreign-earned income exclusion. This "ACA MAGI" is one of the broader add-back lists in the code and is the only MAGI version that adds municipal bond interest. Early retirees who plan to buy ACA coverage often manage capital gains and Roth conversions to stay below 400% of the federal poverty level (the cliff at which premium tax credits previously vanished entirely; the American Rescue Plan and Inflation Reduction Act softened this through 2025, with current-law extension subject to ongoing legislation).

Formula

MAGI = AGI + Specific Add-Backs (varies by tax provision)

AGI = Adjusted Gross Income from Form 1040 line 11
Common Add-Backs = Student loan interest deduction, foreign-earned income exclusion (Form 2555), tuition and fees deduction, deducted Traditional IRA contributions (for Roth IRA test), nontaxable Social Security (for ACA)

Worked example

Suppose your AGI is $145,000, you took a $2,500 student loan interest deduction, and you want to know if you can contribute to a Roth IRA in 2026.

AGI: $145,000
Add back student loan interest deduction: +$2,500
MAGI for Roth IRA purposes: $147,500
2026 Roth IRA phase-out (single): $150,000 to $165,000

Result: Your MAGI of $147,500 is below the $150,000 phase-out floor, so you can contribute the full $7,000 Roth IRA limit. Had your MAGI been $155,000, you would be in the phase-out and could only contribute a partial amount.

Extension - inside the phase-out: if MAGI had been $155,000, the reduced Roth contribution is calculated as $7,000 x (1 - ($155,000 - $150,000) / $15,000) = $7,000 x 0.667 = $4,667. You would be allowed to contribute $4,667 directly to a Roth IRA. The remaining $2,333 of your annual IRA capacity could go to a non-deductible Traditional IRA and then be converted via the backdoor Roth strategy if no other Traditional IRA balances exist (the pro-rata rule complicates things if they do). At MAGI of $165,000 or above, direct Roth contributions are zero and the backdoor route is the only path. This is why high earners often switch entirely to the backdoor Roth in their peak earning years.

Related calculators on 3Tej

Plug your own numbers into one of these free calculators to apply the math live:

MAGI Modified AGI Calculator Roth IRA Vs Traditional IRA Income Tax Calculator

Frequently asked questions

How is MAGI different from AGI?

MAGI is AGI plus specific deductions and exclusions added back. The exact add-backs depend on which tax provision you are testing - there is no single MAGI definition that applies to all rules.

Which tax provisions use MAGI?

Roth IRA contribution eligibility, Traditional IRA deduction phase-outs, ACA premium tax credit, Net Investment Income Tax (NIIT), Medicare IRMAA, education credits, and the savings bond interest exclusion all use their own MAGI definitions.

Where do I find my MAGI?

MAGI is not printed on Form 1040. You start with AGI (line 11) and add back the specific items defined by the tax provision you are working with - the IRS publishes a worksheet for each major rule.

Does MAGI include capital gains?

Capital gains are already included in AGI, so they are part of MAGI by default. This often pushes high-income investors into Roth IRA phase-outs and IRMAA brackets in big-sale years.

How do I lower my MAGI?

Most strategies that lower AGI also lower MAGI: pre-tax 401(k), HSA contributions, and reducing capital gains realizations. Note that Traditional IRA deductions reduce AGI but get added back for the Roth IRA MAGI test.

What MAGI triggers IRMAA?

For 2026, single filers with MAGI above $109,000 (from 2024 tax return) start paying Medicare IRMAA surcharges; for married filing jointly, the threshold is $218,000. Higher brackets kick in at $137,000, $171,000, $205,000, and $500,000.

What is the 2026 Roth IRA phase-out range?

For 2026, the Roth IRA MAGI phase-out is $150,000 to $165,000 for single filers and $236,000 to $246,000 for married filing jointly. Above the top of the band, direct Roth contributions are not allowed - high earners often use the backdoor Roth strategy instead.