Modified adjusted gross income, or MAGI, is your adjusted gross income with certain deductions and exclusions added back in. The IRS and other federal agencies use it to decide whether you qualify for things like Roth IRA contributions, Affordable Care Act premium tax credits, Medicare premium surcharges, and a range of tax credits. There is no single MAGI number that follows you around: each program defines the calculation slightly differently, so the same person can have several different MAGIs in the same year depending on what’s being checked.
How MAGI Differs From AGI
Your adjusted gross income is the starting point. It sits on Line 11 of Form 1040 and equals your total income (wages, investment gains, business income, retirement distributions, and so on) minus a set of above-the-line deductions such as student loan interest, IRA contributions, and self-employment tax. AGI determines your tax bracket, and it’s the number most people mean when they talk about their income for tax purposes.
MAGI takes that AGI and puts some of those deductions and exclusions back on top. The logic is simple. If you earned $90,000 but claimed a $2,500 student loan interest deduction to bring your AGI to $87,500, a program deciding whether you qualify for a subsidy or a retirement account contribution may want to measure the full $90,000 you had access to. Which items get added back is where the formulas diverge.
The Add-Backs That Show Up in Most Formulas
A short list of items appears in nearly every MAGI calculation:
- Student loan interest deduction. You can deduct up to $2,500 in student loan interest from your AGI each year, and most MAGI formulas add it back.1Office of the Law Revision Counsel. 26 USC 221 – Interest on Education Loans
- Foreign earned income exclusion. U.S. citizens working abroad can exclude up to $132,900 of foreign earnings for 2026; that exclusion gets added back.2Internal Revenue Service. Figuring the Foreign Earned Income Exclusion
- Savings bond interest used for education. Interest from Series EE and Series I bonds redeemed for qualified tuition is tax-free, but it comes back for MAGI.3Office of the Law Revision Counsel. 26 USC 135 – Income From United States Savings Bonds Used To Pay Higher Education Tuition and Fees
- Employer-provided adoption benefits. Amounts your employer paid or reimbursed for adoption expenses are excluded from gross income but typically added back for MAGI.
Beyond this core, individual programs pull in extras. Roth IRA eligibility folds in the IRA deduction itself. ACA marketplace subsidies pull in tax-exempt interest and the non-taxable portion of Social Security benefits. The IRS keeps a reference page listing the specific add-backs for each program.4Internal Revenue Service. Modified Adjusted Gross Income
Why the Formula Changes by Program
There is no single MAGI definition in the tax code. Each section of the Internal Revenue Code that uses MAGI defines it a little differently, tailored to what that particular benefit is meant to measure. Four common versions show how far the formulas drift.
Roth IRA
For Roth IRA contribution eligibility, start with AGI and add back the IRA deduction, student loan interest deduction, excludable savings bond interest, employer-provided adoption benefits, and any foreign earned income or housing amounts you excluded. Then subtract income from IRA conversions and rollovers to a Roth IRA. That subtraction is unique to the Roth formula.4Internal Revenue Service. Modified Adjusted Gross Income
ACA Marketplace Subsidies
The Affordable Care Act uses a broader definition. ACA MAGI equals your AGI plus tax-exempt interest (such as income from municipal bonds), the non-taxable portion of Social Security benefits, and any foreign earned income you excluded. Because this formula captures income streams that don’t show up in AGI at all, retirees living primarily on Social Security often see a higher MAGI for marketplace purposes than they expect.
Medicare Premiums (IRMAA)
Medicare’s income-related monthly adjustment amount uses one of the simpler formulas: your AGI plus tax-exempt interest income.5Social Security Administration. Medicare Premiums The twist is timing. IRMAA relies on your tax return from two years earlier, so the MAGI that sets your 2026 premiums comes from your 2024 return. A one-time spike from selling a home or exercising stock options can push you into a higher premium bracket two years later. You can request a reduction by filing Form SSA-44 with Social Security after a qualifying life event such as retirement, divorce, or the death of a spouse.
Student Loan Interest Deduction
To decide whether you can claim the student loan interest deduction itself, the tax code defines MAGI as AGI calculated without regard to the student loan interest deduction, foreign earned income exclusion, foreign housing exclusion, and income from certain U.S. territories.1Office of the Law Revision Counsel. 26 USC 221 – Interest on Education Loans You add those items back to see if your income is low enough to take the deduction in the first place.
The same pattern repeats across other credits and taxes. Roth IRA contributions phase out over MAGI ranges tied to filing status and inflation-adjusted each year, and Traditional IRA deductibility phases out separately depending on whether you or your spouse is covered by a workplace retirement plan.6Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,5007Office of the Law Revision Counsel. 26 USC 1411 – Imposition of Tax8Internal Revenue Service. Education Credits – AOTC and LLC9Internal Revenue Service. Child Tax Credit Before you rely on a threshold, confirm which version of MAGI that program uses.
Documents You Need to Do the Math
Start with your completed Form 1040 for your AGI. Then gather whichever of these apply:
- Form 1098-E, which reports the student loan interest you paid during the year.
- Form 2555, which reports foreign earned income and housing amounts you excluded.10Internal Revenue Service. Foreign Earned Income Exclusion – Forms to File
- Form 8815, which reports savings bond interest excluded for education expenses.11Internal Revenue Service. Form 8815 – Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989
- Form 8839, which reports employer-provided adoption benefits excluded from income.
- Form SSA-1099, which reports total Social Security benefits (needed for ACA MAGI).
- Brokerage statements showing tax-exempt interest from municipal bonds (needed for both ACA and Medicare MAGI).
The arithmetic itself is simple addition. Pick the formula that matches the benefit you’re checking, pull the amounts off the forms above, and add them to your AGI. If you’re checking eligibility for more than one program, run the calculation separately for each one using that program’s add-back list.4Internal Revenue Service. Modified Adjusted Gross Income
What Getting Your MAGI Wrong Costs
The most common penalty hits Roth IRA contributors. If your MAGI turns out higher than you thought and you put in more than allowed, the IRS charges a 6% excise tax on the excess for every year it stays in the account.12Office of the Law Revision Counsel. 26 USC 4973 – Tax on Excess Contributions to Certain Tax-Favored Accounts and Annuities The tax repeats annually until you fix it.
There are two ways to correct an over-contribution. You can withdraw the excess plus any earnings it generated by the due date of your return, including extensions; the earnings portion counts as taxable income for that year, but no excise tax applies. Or you can recharacterize the contribution by transferring it from your Roth to a Traditional IRA through a trustee-to-trustee transfer before the same deadline.13Internal Revenue Service. Instructions for Form 8606 If you’ve already filed without doing either, you get an additional six months from the original due date (excluding extensions) to withdraw the excess and file an amended return.
MAGI errors can also trigger repayment of ACA premium tax credits. If you underestimated your income when enrolling and received larger advance subsidies than you were entitled to, you’ll owe the difference when you file. Someone whose actual MAGI ends up slightly over the applicable income cap can owe back a full year’s subsidy, which is why it’s worth updating your marketplace estimate whenever your income changes during the year rather than settling up at tax time.