The income levels where federal tax credits and deductions start shrinking are called phase-out thresholds, and in 2026 almost all of them are pegged to your modified adjusted gross income rather than your salary or your taxable income. The AGI thresholds that phase out tax credits and deductions vary widely by benefit: the Child Tax Credit starts declining at $200,000 for single filers, the student loan interest deduction disappears at $100,000, and Medicare Part B surcharges kick in at $109,000. Knowing where each line falls, and how the reduction is calculated, lets you plan around it instead of losing benefits you were counting on.
Why MAGI Is the Number That Matters
Adjusted gross income is your total income minus a specific list of above-the-line deductions like retirement plan contributions, HSA deposits, and educator expenses. It appears on line 11 of your Form 1040.1Internal Revenue Service. Adjusted Gross Income2Office of the Law Revision Counsel. 26 U.S.C. 62 – Adjusted Gross Income Defined
Modified adjusted gross income adds certain excluded items back in, such as foreign earned income or tax-exempt interest. The catch: MAGI is defined differently for different benefits. The add-backs for Roth IRA eligibility are not the same as those for the Child Tax Credit or Medicare surcharges. When you check a phase-out, confirm which version of MAGI applies. For most wage earners with straightforward returns, AGI and MAGI come out identical.
Child Tax Credit
The maximum 2026 Child Tax Credit is $2,200 per qualifying child.3Internal Revenue Service. Rev. Proc. 2025-32 It begins phasing out at $200,000 of MAGI for single filers and heads of household, and at $400,000 for married couples filing jointly. The credit drops by $50 for every $1,000 (or fraction thereof) your income exceeds the threshold.4Office of the Law Revision Counsel. 26 U.S.C. 24 – Child Tax Credit
A married couple with two children and $430,000 in MAGI sits $30,000 over the threshold, so their credit is reduced by $1,500 (50 × 30) and they claim $2,900 of the original $4,400. The refundable portion is capped at $1,700 per child, which matters when your tax liability is smaller than the credit.3Internal Revenue Service. Rev. Proc. 2025-32
Earned Income Tax Credit
The EITC uses the tightest income windows in the code. For 2026, the credit disappears entirely at these MAGI levels:3Internal Revenue Service. Rev. Proc. 2025-32
- No qualifying children: $19,540 single or head of household; $26,820 married filing jointly
- One child: $51,593 / $58,863
- Two children: $58,629 / $65,899
- Three or more children: $62,974 / $70,244
Maximum credit amounts for 2026 run from $664 (no children) to $8,231 (three or more).3Internal Revenue Service. Rev. Proc. 2025-32 There is also a side door that trips up people who otherwise qualify: if your investment income (interest, dividends, capital gains) exceeds $12,200, you lose the entire credit regardless of your earned income.5Office of the Law Revision Counsel. 26 U.S.C. 32 – Earned Income
Education Credits and the Student Loan Interest Deduction
The American Opportunity Tax Credit is worth up to $2,500 per eligible student for the first four years of college. You get the full credit with MAGI at $80,000 or below ($160,000 joint), a partial credit through $90,000 ($180,000 joint), and nothing above.6Internal Revenue Service. American Opportunity Tax Credit
The Lifetime Learning Credit uses the same $80,000–$90,000 and $160,000–$180,000 windows and is worth up to $2,000 per return.7Internal Revenue Service. Lifetime Learning Credit It has no cap on how many years you can claim it, which suits graduate students and career changers. You cannot claim both credits for the same student in the same year.
The student loan interest deduction lets you deduct up to $2,500 of interest paid, no matter how many loans you carry.8Office of the Law Revision Counsel. 26 U.S.C. 221 – Interest on Education Loans For 2026, it phases out from $85,000 to $100,000 for single filers and $175,000 to $205,000 for joint filers.3Internal Revenue Service. Rev. Proc. 2025-32 It’s an above-the-line deduction, so you don’t need to itemize, but married-filing-separately filers cannot claim it at all.
Retirement Account Phase-Outs
Traditional IRA Deduction
Anyone with earned income can contribute up to $7,500 to a traditional IRA in 2026 ($8,500 at age 50 or older), but the deduction depends on whether you or your spouse have a workplace retirement plan.9Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 If you’re covered at work, 2026 phase-outs run:
- Single or head of household: full deduction up to $81,000, partial to $91,000, none above
- Married filing jointly, contributor is the one covered: $129,000 to $149,000
- Married filing jointly, only the non-contributing spouse is covered: $242,000 to $252,000
If neither spouse participates in any employer plan, there is no income-based phase-out at all.10Office of the Law Revision Counsel. 26 U.S.C. 219 – Retirement Savings
Roth IRA Contributions
Roth contributions don’t produce a deduction, but the income ceiling still matters because losing access shuts down the tax-free growth. For 2026, you can contribute the full amount with MAGI below $153,000 (single) or $242,000 (joint). Contributions phase out from $153,000 to $168,000 for single filers and $242,000 to $252,000 for joint filers. Married filing separately faces a phase-out from $0 to $10,000.
Saver’s Credit
The Saver’s Credit is a nonrefundable credit worth up to 50% of the first $2,000 contributed to a retirement account ($4,000 for joint filers). For 2026 it phases down through three tiers and disappears at AGI above $40,250 (single), $60,375 (head of household), or $80,500 (joint).9Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 Starting in 2027, this credit is being replaced by the Saver’s Match, a direct government contribution into your retirement account.
Medicare IRMAA and the Net Investment Income Tax
The Income-Related Monthly Adjustment Amount adds a surcharge to Medicare Part B premiums for higher-income beneficiaries. The 2026 base premium is $202.90 per month, and surcharges begin above $109,000 (individual) or $218,000 (joint) using MAGI from two years prior, meaning your 2024 return determines your 2026 premium.11Centers for Medicare & Medicaid Services. 2026 Medicare Parts A and B Premiums and Deductibles
A joint-filing couple with 2024 MAGI between $274,000 and $342,000 pays $405.80 per person per month; at the top tier ($750,000 or more joint), it reaches $689.90 each. IRMAA uses cliff brackets. One dollar over a threshold applies the full higher premium for all 12 months.11Centers for Medicare & Medicaid Services. 2026 Medicare Parts A and B Premiums and Deductibles
The Net Investment Income Tax adds a 3.8% surtax on investment income (interest, dividends, capital gains, rental income, royalties) once MAGI exceeds $200,000 (single), $250,000 (joint), or $125,000 (married filing separately).12Internal Revenue Service. Topic No. 559, Net Investment Income Tax These thresholds don’t adjust for inflation, so more taxpayers cross them each year. The tax applies to the lesser of your net investment income or the amount by which MAGI exceeds the threshold. A single filer at $210,000 MAGI with $30,000 in investment income owes 3.8% on the $10,000 excess.
How the Phase-Out Math Actually Works
Three different mechanics show up across the tax code, and which one applies changes how you plan.
Most phase-outs are proportional. The IRS takes the amount your MAGI exceeds the lower threshold, divides it by the width of the phase-out range, and reduces the benefit by that percentage. On a $2,500 deduction phasing out from $85,000 to $100,000, a MAGI of $92,500 is halfway through the $15,000 range, so half the deduction is gone and $1,250 remains.
The Child Tax Credit uses a flat step-down instead. Fifty dollars come off for every $1,000 (or fraction) above the threshold, and the credit keeps shrinking until it hits zero.4Office of the Law Revision Counsel. 26 U.S.C. 24 – Child Tax Credit For a family with one child, the $2,200 credit reaches zero $44,000 above the threshold.
A few provisions use a true cliff, where a single dollar of excess income triggers the full penalty. Medicare IRMAA is the biggest one. The EITC investment-income limit is another. Cliff-style phase-outs make year-end planning far more consequential than gradual ones.
What to Do If You’re Close to a Threshold
The most direct way to lower MAGI is contributing to tax-deferred retirement accounts. In 2026, you can defer up to $24,500 through a 401(k), 403(b), or similar plan, plus $8,000 in catch-up contributions at age 50 or older, or $11,250 between ages 60 and 63.9Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 Every dollar deferred reduces AGI dollar-for-dollar.
Health savings accounts work the same way. The 2026 limits are $4,400 (self-only coverage) and $8,750 (family coverage), fully deductible from gross income.13Internal Revenue Service. Notice 2026-5 – Expanded Availability of Health Savings Accounts A married couple maxing out both a 401(k) and a family HSA can pull MAGI down by more than $57,000, sometimes enough to reach below a phase-out threshold for education credits or the IRA deduction.
Timing matters as well. Deferring a bonus, harvesting investment losses to offset gains, or bunching charitable deductions into a single year can keep you below a threshold. Capital losses offset capital gains dollar-for-dollar and up to $3,000 of ordinary income per year, with unused losses carrying forward indefinitely.14Internal Revenue Service. Topic No. 409, Capital Gains and Losses For Medicare IRMAA, the two-year lookback means planning has to start well before you enroll.
One trap catches people often: a Roth conversion raises your MAGI in the year you convert. A large conversion can trigger IRMAA surcharges, wipe out education credits, and push you past the NIIT threshold in the same year. Spreading conversions across several years limits how much any single year’s MAGI spike can cost.