What Is Modified Adjusted Gross Income (MAGI)?

The IRS uses your modified adjusted gross income (MAGI) to determine whether you qualify for Important tax benefits include deducting contributions to your individual retirement account (IRA) and making contributions to your Roth IRA. Many taxpayers consult a financial advisor to optimize their tax strategy for their retirement goals. Let’s take a look at your modified adjusted gross income and break down how it may impact your tax bill.

What is Modified Adjusted Gross Income (MAGI)?

Simply put, your MAGI is your adjusted gross income (AGI) plus tax-exempt interest income and specific deductions added back. The IRS uses MAGI to establish whether you qualify for certain tax benefits since it can offer a more comprehensive financial picture.

For many taxpayers, their MAGI is the same as their AGI. But, if you have non-taxable Social Security benefits, tax-exempt interest and untaxed foreign income, you will need to add them back to your AGI when calculating your MAGI.

How to Calculate MAGI

Before you can calculate your MAGI, you’ll need to know how to calculate your adjusted gross income (AGI). Your AGI shows how much taxable income you have after subtracting above-the-line deductions from your gross income. Your gross income is your pre-tax income, including earnings, tips and wages, plus taxable interest, dividends, unemployment benefits and taxable retirement distributions.

Calculating Your AGI

When calculating your AGI, you will deduct qualifying adjustments that include:

• Alimony payments (for divorces finalized before 2019)
• Educator expenses
• Health savings account (HSA) contributions
• IRA deductions
• Student loan interest

You can find other tax deductions in your Form 1040.

Using AGI to Calculate MAGI

To get your MAGI, you’ll need to add back interest and expenses that you would have deducted from your AGI. Because many of them are uncommon, don’t be surprised if your MAGI and AGI are the same.

These deductions include:

• Student loan interest
• Half of the self-employment tax you paid
• Passive income losses
• Taxable Social Security payments
• Deductible higher education expenses

Some exclusions for certain adoption expenses, foreign earned income and U.S. savings bonds income also get added back to complete your MAGI calculation.

How the IRS Uses MAGI and AGI to Calculate Benefits

Both your MAGI and AGI determine which deductions and credits you are eligible to claim. And the IRS may look at your MAGI if your AGI doesn’t provide an accurate representation of your financial situation.

Your AGI is used to determine specific tax credits and exemptions. Credits for the 2024 and 2025 tax years include the Child and Dependent Care Tax Credit, the Credit for the Elderly or Disabled, the Adoption Credit and the Earned Income Tax Credit (EITC). Common exemptions for 2024 and 2025 include total itemized deductions, mortgage insurance premiums, charitable contributions and qualifying medical deductions.

By comparison, your MAGI will affect how much student loan interest you can deduct. If you file as a single taxpayer for the 2025 tax year and your MAGI exceeds $100,000 ($200,000 for joint filers), you cannot claim a student loan interest deduction. Single taxpayers with MAGI between $85,000 and $100,000 (between $170,000 and 200,000 for joint filers) can deduct up to $2,500 of the interest they paid.

Other Uses of Modified Adjusted Gross Income

Besides determining what general tax deductions you qualify for, your MAGI is also used to determine contributions to certain retirement accounts. It’s also used to determine how much credit you might receive for certain benefits. Let’s take a look at the things MAGI may impact that are commonly used:

Traditional IRA Contributions

MAGI also dictates whether taxpayers with access to workplace retirement accounts can make tax-deductible contributions to an IRA.

If you were covered by a workplace retirement plan during the 2024 tax year and filed as a single taxpayer, you could not claim a traditional IRA deduction if your MAGI was $87,000 or more ($143,000 and over for joint filers). However, single filers with MAGI between $77,000 and $87,000 could claim a deduction if they were covered by a workplace plan. That range was between $123,000 and $143,000 for joint filers.

For the 2025 tax year, single filers covered by a workplace plan can claim a full IRA deduction if their MAGI is below $79,000 ($126,000 for joint filers) and a partial deduction if their MAGI is $89,000 or less ($146,000 for joint filers).

Roth IRA Contributions

On the flip side, your MAGI is also used to calculate the maximum amount that you can contribute to your Roth IRA.

For the 2024 tax year, single filers could contribute the full $7,000 ($8,000 for people age 50 or older) if your MAGI was less than $146,000 ($230,000 for joint filers). Taxpayers with MAGI between $146,000 and $161,000 ($230,000-$240,000 for joint filers) could make partial contributions to a Roth IRA.

For the 2025 tax year, single filers can contribute the full $7,000 ($8,000 for those 50 or older) if their MAGI is below $150,000 ($236,000 for joint filers). Filers with MAGI between $150,000 and $165,000 ($236,000 and $246,000 for joint filers) can make partial contributions to a Roth IRA.

Eligibility for Premium Tax Credits

Your MAGI determines eligibility for premium tax credits and other savings applicable to marketplace health insurance, Medicaid and the Children’s Health Insurance Program (CHIP).

Bottom Line

Your modified adjusted gross income is important because it affects your tax liability. It’s what the federal government uses to decide whether you qualify for certain tax breaks. And in some cases, it may provide a better reflection of your financial status than your adjusted gross income. If you’re not sure whether your MAGI affects the number of tax deductions and credits you can claim, you may want to consider meeting with a tax professional.

Tips for Filing Your Taxes

• Figuring out which tax deductions and credits you are eligible for can be complicated. A financial advisor could help you maximize a tax strategy for your financial goals. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• Once you’ve figured out your deductions and credits, you might want to see what your tax return looks like. SmartAsset’s tax return calculator can help you estimate whether you will get a refund or owe money to the government.
• Many people stress about filing taxes, but these tax filing services can make the process easier. Check out our list of tax filing software, and our list of free online tax software.

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