Modified Adjusted Gross Income (MAGI): What It Is, How to Calculate It

What is modified adjusted gross income?

Modified adjusted gross income refers to your adjusted gross income (AGI) with certain deductions added back in. Your MAGI is important because it helps determine your eligibility for certain tax benefits, such as deducting traditional IRA contributions or taking the premium tax credit. It also determines whether you can contribute to a Roth IRA.

Calculating your modified adjusted gross income can be more complicated than it seems. Some credits or tax programs that rely on MAGI as an eligibility benchmark may require you to add back in different types of deductions, which means your MAGI figure can vary depending on your reason for calculating it.

» Need to back up? Learn about adjusted gross income

How to calculate MAGI

1. Determine your gross income

Figuring out your MAGI begins with knowing your gross income, which includes all the money you earn, including a salary from a job, capital gains from selling a house or stocks, interest or retirement income, and even unemployment benefits.

2. Figure your adjusted gross income

Your AGI is your gross income minus certain adjustments known as above-the-line deductions. Some of the most common items that are subtracted from gross income to determine AGI include:

• IRA and 401(k) contributions.

• Self-employed retirement plan contributions.

• Half of any self-employment tax paid.

• Health savings account deductions.

• Student loan interest.

• Some business expenses for the performing arts, military reservists and government officials who are paid directly from the public, such as a justice of the peace.

3. Add back certain deductions

Finally, take your AGI and add certain deductions back. Although it may seem like you are subtracting certain items only to add them back again, there may be some difference between the two figures, so it’s important to go through the exercise — even if your AGI and your MAGI end up as the same number.

• IRA contributions.

• Half of self-employment tax paid.

• Qualified tuition expenses.

• Passive loss or income.

• Non-taxable Social Security payments.

• Exclusion for income from U.S. savings bonds.

• Foreign earned income exclusion.

• Foreign housing exclusion or deduction.

• The exclusion under 137 for adoption expenses.

• Rental losses.

• Publicly traded partnerships losses.

• Student loan interest deductions.

Thankfully, quality tax software can often simply and quickly help you determine your MAGI and how it relates to the tax benefits available to you. To know exactly what adjustments you can subtract from your gross income to get your AGI, you can also speak with a tax professional.

What is MAGI used for?

MAGI is used to determine eligibility for many credits and deductions. Some common credits that use MAGI income limits include the child tax credit, the American opportunity credit, the lifetime learning credit, the EV tax credit, and the premium tax credit.

It's also the basis for whether someone can deduct traditional IRA contributions and if they can contribute to a Roth IRA. People who make above a certain MAGI may be limited to a partial deduction or contribution — or none at all. Here's a quick look at how these income limits come into play for traditional and Roth IRAs.

If you (or both you and your spouse) are not covered by a workplace retirement plan, you can take the full IRA deduction when you file your annual return. However, for those with employer-sponsored retirement plans, your MAGI determines whether you're eligible for this deduction and how much you can take.

For example, let's say you’re planning to file your taxes as a single person, you have a workplace retirement plan, and you contribute $7,000 to a traditional IRA in 2024. If your MAGI is $77,000 or less, you can deduct that full $7,000 from your taxable income on your 2024 tax return (filed in 2025). The table below shows how deductions change based on filing status and MAGI.

A Roth IRA is an account that lets you contribute money after you've paid taxes on it, and distributions in retirement are tax-free. To contribute to a Roth IRA, you have to meet certain income limits, which are based on your MAGI. Contributions are reduced, or not allowed, at certain income levels.

The table below outlines Roth IRA contribution limits for tax year 2024 (taxes filed in 2025).

» Learn more about the Roth IRA income limits

Examples of calculating MAGI

Some programs and deductions calculate MAGI differently. Here are a couple of examples of how your MAGI could be calculated for various tax deductions and credits.

Example 1: Can you deduct traditional IRA contributions?

• Add your AGI and the following: student loan interest deduction, foreign earned income and housing exclusions, foreign housing deduction, excluded savings bond interest and excluded employer adoption benefits.

• If the number you arrive at is less than the traditional IRA deduction limit, then you can deduct the full amount. Depending on your filing status, and if you have a workplace retirement plan, those deduction limits can change. Regardless of your MAGI, you can take the full deduction if neither you nor your spouse are covered by a workplace retirement program.

Example 2: Are you eligible for certain education credits?

• Add your AGI and the following: foreign earned income and housing exclusions, foreign housing deduction, excluded bona fide resident of Puerto Rico or American Samoa income.

• Both the American opportunity credit and the lifetime learning credit are phased out at certain MAGI levels. To claim the full credit, your MAGI generally has to be $80,000 or less ($160,000 or less for married filing jointly).

• For single filers with a MAGI between $80,000 and $90,000, you’ll receive a reduced credit. After $90,000, you are not eligible for the credit.

• For those married filing jointly, the phase-out lasts between $160,000 and $180,000, over which you are not eligible. If you file with the married filing separately status, you are not eligible for these tax credits.

» Learn more: What tax credits can I qualify for?

What's the difference between MAGI and AGI?