Modified adjusted gross income (MAGI) is your adjusted gross income with certain deductions and exclusions added back. The IRS uses MAGI, not AGI, to decide whether you can contribute to a Roth IRA, deduct a traditional IRA contribution, claim the premium tax credit, take the new senior, tips and overtime deductions, and whether you owe the net investment income tax. There is no single MAGI formula: each tax benefit defines its own, but for most people MAGI equals or is close to AGI.
Where Modified Adjusted Gross Income Is Used in 2026
| Tax rule | 2026 MAGI range (single / joint) |
|---|---|
| Roth IRA contribution phase-out | $153,000-$168,000 / $242,000-$252,000 |
| Traditional IRA deduction (covered by workplace plan) | $81,000-$91,000 / $129,000-$149,000 |
| Senior deduction ($6,000) | Phases out above $75,000 / $150,000 |
| Tips and overtime deductions | Phase out above $150,000 / $300,000 |
| SALT cap ($40,400) | Phases down above $505,000 |
| Net investment income tax (3.8%) | Applies above $200,000 / $250,000 |
| Medicare IRMAA surcharges | Begin above $109,000 / $218,000 (based on MAGI from two years earlier) |
| Premium tax credit | Based on household MAGI as a percentage of the federal poverty level |
How to Calculate Modified Adjusted Gross Income
Start with AGI from Form 1040 line 11, then add back items the specific rule requires. Common add-backs include:
- Tax-exempt interest (for the premium tax credit, IRMAA and Social Security taxation)
- Non-taxable Social Security benefits (premium tax credit)
- Excluded foreign earned income and housing (most MAGI definitions)
- Student loan interest and IRA deductions (traditional IRA and Roth calculations)
- Roth conversion income is excluded when figuring Roth contribution eligibility
See the IRS Publication 590-A for the retirement account definitions.
Modified Adjusted Gross Income and Retirement Accounts
For Roth IRAs, MAGI determines whether you can contribute the full $7,500 ($8,600 if 50 or older), a reduced amount or nothing. High earners can still use a backdoor Roth. For traditional IRAs, MAGI only matters if you or your spouse is covered by a workplace plan. See Roth IRA contribution limits for 2026 and 2026 IRA contribution deadlines.
MAGI and Health Insurance
Marketplace premium tax credits are based on household MAGI, which adds tax-exempt interest and non-taxable Social Security to AGI. Estimate carefully when you enroll, because the credit is reconciled on Form 8962 using the Form 1095-A you receive. For Medicare, MAGI from two years earlier sets IRMAA surcharges; see Medicare open enrollment 2027.
MAGI and the New 2025-2028 Deductions
The One Big Beautiful Bill Act tied several new deductions to MAGI. The $6,000 senior deduction shrinks by 6% of MAGI above $75,000 ($150,000 joint). The tips deduction (up to $25,000) and the overtime deduction (up to $12,500, or $25,000 joint) each fall by $100 for every $1,000 of MAGI above $150,000 ($300,000 joint). Because these deductions are claimed on Schedule 1-A, a year with a large bonus, capital gain or Roth conversion can reduce or eliminate them.
MAGI and the Net Investment Income Tax
The 3.8% net investment income tax applies to the smaller of your net investment income or the amount by which MAGI exceeds $200,000 ($250,000 joint, $125,000 married filing separately). These thresholds are not indexed for inflation, so more households cross them each year. For NIIT purposes, MAGI is AGI plus excluded foreign earned income. See the net investment income tax.
Example: Calculating Modified Adjusted Gross Income
Sam’s 2026 AGI is $70,000 after a $5,000 deduction for student loan interest and other adjustments. He also earned $3,000 of municipal bond interest. For the premium tax credit, his MAGI is $73,000, because tax-exempt interest is added back. For Roth IRA purposes, he adds back the student loan interest deduction (up to $2,500) instead, so his MAGI is $72,500, well under the $153,000 phase-out.
Ways to Lower Your MAGI
- Increase pre-tax 401(k), 403(b) or HSA contributions.
- Use qualified charitable distributions instead of taxable IRA withdrawals after 70½.
- Time Roth conversions and capital gains for lower-income years.
- Harvest investment losses to offset gains.
Frequently Asked Questions
Is MAGI the same as AGI?
Often it is close or equal, but MAGI adds back specific items, and each tax benefit defines it differently.
Where do I find my modified adjusted gross income?
It is not on your tax return. Start with AGI on Form 1040 line 11 and add the items the rule requires.
Does a Roth conversion raise MAGI?
It raises MAGI for IRMAA, the premium tax credit and NIIT, but not for Roth contribution eligibility.
Why does MAGI matter for Medicare?
Medicare uses MAGI from two years earlier to set Part B and Part D surcharges.
Final Thoughts
Your MAGI controls many tax breaks. Knowing which definition applies, and managing income near the thresholds, can protect deductions, credits and Roth eligibility. Married couples should also compare filing jointly vs. filing separately, since filing status changes most MAGI limits.
Have questions about how this applies to your situation? Book a free consultation with Aric and get answers from a CPA.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.