Household income on a tax return is the combined modified adjusted gross income (MAGI) of you, your spouse if you file jointly, and any dependent who earns enough to be required to file a return of their own. The definition comes from 26 U.S.C. §36B, the Premium Tax Credit statute, which is where most people run into the term. If you bought Marketplace health coverage, this is the number that decides your subsidy.
What Goes Into Each Person’s MAGI
Household income is built one person at a time. For each included person, start with adjusted gross income (AGI) from Line 11 of Form 1040. AGI alone doesn’t capture everything a household actually has to spend, so the statute requires three add-backs:
- Tax-exempt interest, the kind that comes from municipal bonds and similar investments and normally escapes federal tax.
- Non-taxable Social Security benefits. You add the full benefit amount, including the portion that isn’t taxed on the return. Supplemental Security Income (SSI) is not included.
- Foreign earned income excluded under the foreign earned income exclusion.
AGI plus those three items equals that person’s MAGI. Add every included person’s MAGI together and you have household income.
The add-backs exist so the number reflects real economic resources. A family living largely on municipal bond interest or Social Security would look poorer than it is if only taxable AGI counted.
Who Counts as Part of Your Tax Household
Your tax household is you, your spouse if you file jointly, and everyone you claim as a dependent under the qualifying child or qualifying relative rules. A college student you claim still belongs in the household even if they live in a dorm most of the year.
Whether a dependent’s income gets folded into household income is a separate question. Under §36B, you add a dependent’s MAGI to the total only if that dependent is required to file their own return because their income clears the filing threshold. For 2026, a dependent with only earned income generally must file after earning more than the $16,100 standard deduction amount. A dependent with unearned income like interest, dividends, or capital gains crosses the threshold much sooner. If a dependent files only to claim back withheld taxes or estimated payments they weren’t actually required to owe on, their income stays out.
The line matters. A teenager with $8,000 from a summer job has no filing requirement, and none of that money touches your household total. A dependent with $20,000 in wages has to file, and their full MAGI is added to yours.
Calculating Household Income Step by Step
Pull Form 1040 for every person in the household who filed or is required to file. If your spouse filed separately or a dependent filed on their own, you need each of those returns.
- Find AGI on Line 11 of each person’s Form 1040.
- Add tax-exempt interest from Line 2a.
- Add non-taxable Social Security benefits, which is Line 6a minus Line 6b. If all benefits were taxed, this is zero.
- Add any foreign earned income excluded on Form 2555.
- The result is that person’s MAGI. Add every household member’s MAGI together for household income.
Form 8962 walks through this on Lines 2a and 2b, with a separate worksheet for dependents’ MAGI. Tax software handles the arithmetic if you enter each person’s return data, but knowing where each number comes from lets you catch mistakes before you file.
Why This Number Matters at Tax Time
Household income drives the Premium Tax Credit. It’s expressed as a percentage of the federal poverty level for your household size, and that percentage decides both whether you qualify and how much of your benchmark plan premium you’re expected to pay yourself. For 2026, the federal poverty level for a single person in the 48 contiguous states is $15,960 and for a family of four it’s $33,000, with higher figures in Alaska and Hawaii.
Two things change for 2026 that make an accurate household income figure especially important. First, the 400% FPL cap is back. From 2021 through 2025 Congress had suspended it, letting higher-income households still receive a credit; that expansion has expired. For 2026, household income has to fall between 100% and 400% of the federal poverty level to qualify at all.
Second, the repayment caps that ran alongside that expansion are also gone. If you took advance payments of the credit through the year based on estimated income, Form 8962 reconciles them against the credit you actually earned based on final household income. When income came in lower than projected, you can pick up additional credit. When it came in higher, you repay the excess, and for tax year 2026 there is no dollar limit on that repayment at any income level. The repayment is added to your total tax, so it either reduces your refund or increases what you owe.
Skipping Form 8962 when you received advance payments can stall the return entirely and cost you eligibility for advance credits in later years.
MAGI Is Defined Differently for Other Tax Benefits
“Modified adjusted gross income” doesn’t mean the same thing everywhere in the tax code. The add-backs shift depending on the credit or deduction. For traditional IRA contribution limits, the add-backs include items like the IRA deduction itself, the student loan interest deduction, and excluded savings bond interest. For education credits, they focus on excluded foreign income and territorial income. The household income formula described here is specifically the §36B version used for the Premium Tax Credit. If you’re calculating MAGI for another purpose, check the IRS instructions for that form before assuming the same items apply.