What Is Modified AGI (MAGI)? Formulas, Add-Backs, and Thresholds

Modified adjusted gross income, usually shortened to MAGI, is your adjusted gross income with certain deductions or excluded income added back in. There is no single MAGI number on your tax return, and no line labeled that way on Form 1040. The IRS defines MAGI separately for Roth IRAs, the Premium Tax Credit, education credits, the Net Investment Income Tax, Medicare premium surcharges, and other provisions. Each one starts from the same AGI but adds back a different list of items, so the MAGI you calculate for one tax benefit will often not match the MAGI you need for another.

Start With AGI on Line 11

Every MAGI calculation begins with adjusted gross income. AGI is your total income from all sources (wages, investment gains, retirement distributions, rental income, business profits) minus a set of deductions the tax code lets you take before you decide whether to itemize.1Office of the Law Revision Counsel. 26 USC 62 – Adjusted Gross Income Defined These are often called “above-the-line” deductions and include health savings account contributions, student loan interest, educator classroom expenses, traditional IRA contributions, and moving expenses for active-duty military.

After those deductions come off your total income, what remains is AGI. It appears on line 11 of Form 1040 and is the launchpad for every MAGI figure you’ll calculate.2Internal Revenue Service. US Individual Income Tax Return Form 1040 (2025)

Why MAGI Isn’t One Number

This is the part that trips people up. The IRS uses “modified adjusted gross income” in dozens of provisions, but the recipe changes from one to the next.3Internal Revenue Service. Modified Adjusted Gross Income The add-backs for Roth IRA eligibility differ from the add-backs for a Marketplace health insurance subsidy, which differ again from the Net Investment Income Tax. You can end up with several different MAGI figures for the same tax year, all calculated from the same return.

The practical rule: never assume the MAGI you calculated for one purpose works for another. Check which add-backs the specific provision requires before you rely on the number.

The Four Formulas Most Taxpayers Encounter

Roth IRA Contributions

For Roth IRA eligibility, MAGI equals AGI plus:

  • The traditional IRA deduction
  • The student loan interest deduction
  • Excludable savings bond interest (from Form 8815)
  • Employer-provided adoption benefits you excluded from income
  • Any foreign earned income exclusion or foreign housing exclusion or deduction

Income from converting a traditional IRA to a Roth is subtracted.3Internal Revenue Service. Modified Adjusted Gross Income

Premium Tax Credit (Marketplace Insurance)

For the Premium Tax Credit, MAGI equals AGI plus three items only:4HealthCare.gov. What’s Included as Income

  • Tax-exempt interest
  • Non-taxable Social Security benefits
  • Foreign earned income excluded from your return

The IRA deduction and student loan interest deduction don’t get added back here, even though they do for Roth IRA purposes.

Net Investment Income Tax

For the 3.8% Net Investment Income Tax, MAGI is your AGI increased only by the foreign earned income exclusion. If you don’t work abroad, your MAGI and AGI are identical for this purpose.5Internal Revenue Service. Topic No 559 – Net Investment Income Tax

Passive Rental Loss Allowance

For the $25,000 special allowance that lets you deduct rental real estate losses against other income, MAGI is your AGI calculated without any passive activity income or loss. Instead of adding something back, you strip the passive amounts out entirely.6Internal Revenue Service. Publication 925 (2025) – Passive Activity and At-Risk Rules

Add-Backs You’ll See Repeatedly

Although each provision has its own list, a handful of items show up across many MAGI formulas. If none of these apply to you, your MAGI and AGI are probably the same number for most purposes.

  • Foreign earned income exclusion — the income you excluded under the foreign earned income rules gets added back for nearly every MAGI calculation.7Internal Revenue Service. Figuring the Foreign Earned Income Exclusion
  • Foreign housing exclusion or deduction — housing costs excluded or deducted while living abroad, added back under the same statute.8Office of the Law Revision Counsel. 26 USC 911 – Citizens or Residents of the United States Living Abroad
  • Tax-exempt interest — municipal bond interest and similar tax-free earnings, which count toward MAGI for healthcare subsidy eligibility.
  • Non-taxable Social Security benefits — the portion of Social Security income that escapes federal tax is still folded into Marketplace MAGI.
  • Traditional IRA deduction — added back for Roth IRA eligibility, not for most other purposes.
  • Student loan interest deduction — added back only for Roth IRA MAGI.
  • Excludable Series EE and I savings bond interest used for education — added back for Roth IRA MAGI.
  • Employer-provided adoption benefits — added back for Roth IRA MAGI.

2026 Income Thresholds Where MAGI Matters

Roth IRA Contributions

Direct Roth contributions phase out across a MAGI range and disappear above it.9Office of the Law Revision Counsel. 26 USC 408A – Roth IRAs

  • Single or head of household: $153,000 to $168,000
  • Married filing jointly: $242,000 to $252,000
  • Married filing separately: $0 to $10,000

Traditional IRA Deduction

If you or your spouse is covered by a workplace retirement plan, the deduction phases out across these 2026 ranges:10Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500

  • Single filer covered by a workplace plan: $81,000 to $91,000
  • Married filing jointly, contributing spouse covered: $129,000 to $149,000
  • Married filing jointly, contributing spouse not covered but other spouse is: $242,000 to $252,000
  • Married filing separately, covered by a workplace plan: $0 to $10,000

If neither spouse participates in a workplace plan, MAGI doesn’t limit the deduction.

Premium Tax Credit

For 2026, household MAGI generally must fall between 100% and 400% of the federal poverty level to qualify. The enhanced credits that had removed the 400% cap expired after 2025, so households above that level no longer qualify.11Internal Revenue Service. Eligibility for the Premium Tax Credit

Net Investment Income Tax

The 3.8% surtax applies to the lesser of net investment income or the amount by which MAGI exceeds these statutory thresholds, which are not indexed for inflation:5Internal Revenue Service. Topic No 559 – Net Investment Income Tax

  • Single or head of household: $200,000
  • Married filing jointly: $250,000
  • Married filing separately: $125,000

Child Tax Credit

The full credit is available if income does not exceed $200,000 ($400,000 for married couples filing jointly). Above those levels the credit phases out.12Internal Revenue Service. Child Tax Credit

Student Loan Interest and Education Credits

The student loan interest deduction phases out between $85,000 and $100,000 of MAGI for single filers, and $170,000 to $200,000 for joint filers.13Internal Revenue Service. Topic No 456 – Student Loan Interest Deduction The American Opportunity Tax Credit phases out between $80,000 and $90,000 for single filers ($160,000 to $180,000 for joint filers) and is unavailable above the upper limit.14Internal Revenue Service. American Opportunity Tax Credit

Medicare Premium Surcharges

Medicare uses your MAGI from two years earlier to set income-related surcharges (IRMAA) on Part B and Part D premiums.15Centers for Medicare & Medicaid Services. 2026 Medicare Parts A and B Premiums and Deductibles A one-time income spike (selling a home, exercising options, taking a large retirement distribution) can raise premiums for a year well after the money is spent.

Where to Find Each Number on Your Return

Form 1040 doesn’t have a MAGI line. You calculate it by pulling figures from across the return:

Start with the AGI on line 11, then add back only the items the specific provision requires. Worksheets in the IRS publication for each credit or deduction walk you through the exact additions for that provision.

What a Wrong MAGI Costs

Getting MAGI wrong usually costs more than losing a tax break. If your MAGI exceeds the Roth phase-out ceiling and you contribute anyway, the IRS treats the contribution as excess and applies a 6% excise tax every year the money stays in the account.19Internal Revenue Service. Retirement Topics – IRA Contribution Limits The fix is to withdraw the excess (plus its earnings) before the filing deadline, but many people don’t catch the problem for a year or more.

For the Premium Tax Credit, the stakes rose sharply starting in 2026. If you estimated a lower income when enrolling in Marketplace coverage and your actual MAGI comes in higher, you must repay the full difference between the credits you received and the credits you were entitled to. There is no repayment cap for 2026 and beyond.20Internal Revenue Service. Updates to Questions and Answers About the Premium Tax Credit Underestimating income by $20,000 could mean owing thousands back at tax time.

For Medicare, a MAGI miscalculation from two years earlier can lock you into a full year of higher premiums before the surcharge resets, with the top IRMAA tier adding several thousand dollars in Part B costs alone.