Modified Adjusted Gross Income

Modified Adjusted Gross Income (MAGI) is a calculation that starts with one's Adjusted Gross Income and then applies various modifications to that amount.

There are multiple versions of MAGI, and one should take care to use the applicable modifications.

MAGI for Affordable Care Act purposes

See "What to include as income". See what’s included in MAGI and how to estimate it: HealthCare.gov. 2019. https://www.healthcare.gov/income-and-household-information/income/#magi.

MAGI for child tax credit / credit for other dependents

Child Tax Credit (CTC), Credit for Other dependents (ODC). See "Publication 17, Your Federal Income Tax". 32. Child Tax Credit/Credit for Other Dependents: Internal Revenue Service. 2019. https://www.irs.gov/publications/p17#en_US_2019_publink1000174526.

MAGI for education credit purposes

See "Education Credits: Questions and Answers". Q13. What is "modified adjusted gross income" for the purpose of the AOTC?: Internal Revenue Service. February 8, 2019. https://www.irs.gov/credits-deductions/individuals/education-credits-questions-and-answers.

MAGI for traditional IRA purposes

See "Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs)". Modified adjusted gross income (AGI).: Internal Revenue Service. 2019. https://www.irs.gov/publications/p590a#en_US_2019_publink1000230489.

MAGI for Roth IRA purposes

See "Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs)". Modified AGI.: Internal Revenue Service. 2019. https://www.irs.gov/publications/p590a#en_US_2019_publink1000230985.

MAGI for net investment income tax

See Form 8960 "Net Investment Income Tax—Individuals, Estates, and Trusts". Line 13—Modified Adjusted Gross Income (MAGI): Internal Revenue Service. 2019. https://www.irs.gov/instructions/i8960#idm139700582645360.

MAGI for premium tax credit

See "Questions and Answers on the Premium Tax Credit". 8. What is household income?: Internal Revenue Service. Feb 08, 2019. https://www.irs.gov/affordable-care-act/individuals-and-families/questions-and-answers-on-the-premium-tax-credit.

MAGI for rental passive loss allowance

See "Publication 925, Passive Activity and At-Risk Rules". Phaseout rule.: Internal Revenue Service. 2019. https://www.irs.gov/publications/p925#en_US_2019_publink1000104575.

MAGI for student loan interest deductibility

See "Publication 970, Tax Benefits for Education". Modified adjusted gross income (MAGI).: Internal Revenue Service. 2019. https://www.irs.gov/publications/p970#en_US_2019_publink1000204395.

MAGI for Medicare premiums (IRMAA tiers)

This MAGI is defined in 42 U.S.C. 1395r(i)(4), from the Social Security Act §1839:
(4) Modified adjusted gross income.
(A) In general.—For purposes of this subsection, the term “modified adjusted gross income” means adjusted gross income (as defined in section 62 of the Internal Revenue Code of 1986)—
(i) determined without regard to sections 135, 911, 931, and 933 of such Code; and
(ii) increased by the amount of interest received or accrued during the taxable year which is exempt from tax under such Code.

The words "determined without regard to" mean that any income not included in Form 1040 Adjusted Gross Income (AGI) due to those code sections must be added to AGI to calculate MAGI for the IRMAA tiers.
26 U.S. Code § 135 refers to income from U.S. savings bonds used to pay higher education tuition and fees.
26 U.S. Code § 911 refers to income from citizens or residents of the United States living abroad.
26 U.S. Code § 931 refers to income from sources within Guam, American Samoa, or the Northern Mariana Islands.
26 U.S. Code § 933 refers to income from sources within Puerto Rico.

Many web sites have incomplete information about this MAGI. For example, "Medicare Premiums: Rules For Higher-Income Beneficiaries". Social Security Administration. 2020. https://www.ssa.gov/benefits/medicare/medicare-premiums.html. mentions the tax-exempt interest but neglects to mention the necessary addition of the foreign items or income from US Savings bonds used to pay higher education tuition and fees.

The untaxed portion of Social Security benefits is not included in the MAGI calculation for IRMAA.

External links

What Is Modified Adjusted Gross Income?, H&R Block
"The Use of Modified Adjusted Gross Income (MAGI) in Federal Health Programs". Congressional Research Service. 2018. https://crsreports.congress.gov/product/pdf/R/R43861/11.
Investopedia, Modified Adjusted Gross Income (MAGI) Definition

v t e Tax considerations
	Tax basics	Foreign tax credit • Marginal tax rate • Modified Adjusted Gross Income • Payroll tax • Progressive tax • State income taxes • Tax basics • Tax news sources • Taxable account
	Strategic tax considerations	Federal tax credits for individuals • Gift tax • Tax-efficient fund placement • Tax-adjusted asset allocation • Tax-managed fund comparison
	Tax management	Delaying reinvestment of dividends • Donating appreciated securities • Paying a tax cost to switch funds • Placing cash needs in a tax-advantaged account • Reinvesting dividends in a taxable account • Saver's credit • Social Security tax impact calculator • Taxation of Social Security benefits • Timing of transactions to reduce taxes
	Tax loss harvesting	Cost basis methods • Specific identification of shares • Tax loss harvesting • Wash sale
	Tax gain harvesting	Tax gain harvesting
	Tax data	IRS tax statistics • Vanguard fund distributions
	Non-US tax management	Comparison of accumulating ETFs and distributing ETFs • Non-US investors and ETF currencies • Non-US investor's guide to navigating US tax traps • Nonresident alien's ETF domicile decision table • Nonresident alien taxation • Nonresident alien with no US tax treaty & Irish ETFs • Passive foreign investment company • Taxation as a US person living abroad • US tax pitfalls for a non-US person moving to the US • US tax pitfalls for a US person living abroad