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. Let’s take a look at your modified adjusted gross income and break down how it may impact your tax bill.

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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 2025 and 2026 include total itemized deductions, mortgage insurance premiums, charitable contributions, and qualifying medical deductions.

By comparison, your MAGI will affect your student loan interest deduction. 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. For 2026, this stays the same for single filers but increases to between $175,000 and $205,000 for joint filers.

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 2025 tax year and filed as a single taxpayer, you could not claim a traditional IRA deduction if your MAGI was $89,000 or more ($146,000 and over for joint filers). However, single filers with MAGI between $79,000 and $89,000 could claim a deduction if they were covered by a workplace plan. That range was between $126,000 and $146,000 for joint filers.

For the 2026 tax year, single filers covered by a workplace plan can claim a full IRA deduction if their MAGI is below $81,000 ($129,000 for joint filers) and a partial deduction if their MAGI is $91,000 or less ($149,000 for joint filers).

Use our income tax calculator to estimate how lowering your taxable income through retirement contributions could change your overall tax liability.

Income Tax Calculator

Calculate your federal, state and local taxes for the 2025 tax year.

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About This Calculator

Our income tax calculator calculates your federal, state and local taxes based on several key inputs: your household income, location, filing status and number of personal exemptions.

How Income Taxes Are Calculated

First, we calculate your adjusted gross income (AGI) by taking your total household income and reducing it by certain items such as contributions to your 401(k).
Next, from AGI we subtract exemptions and deductions (either itemized or standard) to get your taxable income. Exemptions can be claimed for each taxpayer.
Based on your filing status, your taxable income is then applied to the tax brackets to calculate your federal income taxes owed for the year.
Your location will determine whether you owe local and / or state taxes.

When Do We Update? - We check for any updates to the latest tax rates and regulations annually.

Customer Service - If you would like to leave any feedback, feel free to email info@smartasset.com.

Assumptions

Deductions

"Other Pre-Tax Deductions" are not used to calculate state taxable income.

Credits

The only federal credit automatically calculated is the Savers Credit, depending on your eligibility.
We do not apply any refundable credits, like the Child Tax Credit or Earned Income Tax Credit (EITC).
We do not apply state credits in our calculations.

Itemized Deductions

If itemizing at the federal level, you may need to itemize at the state level too. Some states don't allow itemized deductions, which is accounted for in our calculations.
When calculating the SALT deduction for itemized deductions, we use state and local taxes, and we assume your MAGI.
We assume that there is no cap to itemized deductions, if a state allows them.
We do not categorize itemized deductions (such as medical expenses or mortgage interest), which could be subject to specific caps per state.

Local Tax

Depending on the state, we calculate local taxes at the city level or county level. We do not include local taxes on school districts, metro areas or combine county and city taxes.
With the exception of NYC, Yonkers, and Portland/Multnomah County, we assume local taxes are a flat tax on either state taxable income or gross income.

Actual results may vary based on individual circumstances and changes in tax laws or IRS regulations. Estimates provided by this calculator do not guarantee income tax amounts or rates. Past performance is not indicative of future results.

SmartAsset.com does not provide legal, tax, accounting or financial advice (except for referring users to third-party advisers registered or chartered as fiduciaries ("Adviser(s)") with a regulatory body in the United States). Articles, opinions and tools are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual. Users should consult their accountant, tax advisor or legal professional to address their particular situation.

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 2025 tax year, single filers could contribute the full $7,000 ($8,000 for people age 50 or older) if your MAGI was less than $150,000 ($236,000 for joint filers). Taxpayers with MAGI between $150,000 and $165,000 ($236,000-$246,000 for joint filers) could make partial contributions to a Roth IRA.

For the 2026 tax year, single filers can contribute $7,500 ($8,100 for those 50 or older) if their MAGI is below $153,000 ($242,000 for joint filers). Filers with MAGI between $153,000 and $168,000 ($242,000 and $252,000 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).

MAGI Planning Considerations for Tax Filers

Modified adjusted gross income can shift based on routine financial activity during the year. Changes in wages, bonuses, investment income, capital gains, or tax-exempt interest can move MAGI above or below key thresholds that affect eligibility for deductions, credits and retirement contributions. Because MAGI builds on AGI, even items that are not fully taxable may still influence eligibility calculations.

Retirement-related decisions often interact directly with MAGI. Contributions to workplace plans, traditional IRAs or HSAs can lower AGI, while Roth conversions, taxable distributions or large capital gains can raise it. Timing matters, since income realized late in the year still counts toward the full-year MAGI calculation used when filing taxes.

MAGI can also affect education- and health-related tax benefits. Student loan interest deductions, premium tax credits for marketplace health insurance, and certain education credits are subject to MAGI phaseouts. Taxpayers near these limits may see different outcomes based on how income and deductions are reported for the year.

Because MAGI influences multiple areas of the tax return, reviewing how income sources and deductions interact can provide clarity when planning ahead. A financial advisor or tax professional may review how projected income, retirement activity and filing status affect MAGI-based thresholds when coordinating broader tax and retirement decisions.

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.

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.