MAGI is the single most important number for figuring out whether you qualify for an ACA premium tax credit or for Medicaid. It is not your salary, not your take-home pay, and not your gross income from your paystub. It is a specific tax-based calculation defined in the Affordable Care Act and used by every state marketplace and Medicaid agency.
This guide covers exactly what counts toward MAGI, what does not, how it differs from AGI, and how to calculate it for your marketplace application or Medicaid renewal. Your MAGI determines whether you land in Medicaid or qualify for a premium tax credit.
What Counts Toward the Modified Adjusted Gross Income (MAGI)
These income sources are included in your MAGI for ACA subsidy and Medicaid eligibility:
- Wages, salaries, tips, and W-2 income
- Self-employment and gig income (net of business expenses)
- Unemployment compensation
- Taxable Social Security benefits AND the non-taxable portion
- Social Security Disability Insurance (SSDI) benefits
- Retirement and pension income (including taxable IRA and 401(k) distributions)
- Capital gains (short-term and long-term)
- Interest income, including tax-exempt municipal bond interest
- Dividend income (ordinary and qualified)
- Rental and royalty income
- Alimony received from divorces finalized before 2019
- Excluded foreign earned income
What Does NOT Count Toward the Modified Adjusted Gross Income (MAGI)
These income sources are excluded from MAGI and do not affect your ACA subsidy or Medicaid eligibility:
- Supplemental Security Income (SSI)
- Child support received
- Veterans benefits (most VA disability and pension payments)
- Workers' compensation payments
- Gifts and inheritances
- Proceeds from loans (student loans, mortgages, personal loans)
- Federal tax refunds
- TANF and most cash assistance benefits
- SNAP (food stamps) and WIC benefits
- Qualified scholarships used for tuition and required fees
- Alimony from divorces finalized after December 31, 2018
Why MAGI Instead of Gross Income?
Congress wrote MAGI into the Affordable Care Act in 2010 to create one consistent income standard across the marketplace and Medicaid. Before the ACA, every state used its own rules for Medicaid eligibility, and many counted assets, applied deductions for medical bills, and excluded different categories of income. That made the system unworkable when subsidies and Medicaid had to talk to each other in real time. Today, whether your state expanded Medicaid determines the MAGI threshold that separates Medicaid from marketplace coverage.
MAGI also closes loopholes that gross income leaves open. Wealthy retirees can have very low taxable income while pulling in millions in municipal bond interest, which is tax-exempt. By adding tax-exempt interest and the non-taxable portion of Social Security back to AGI, MAGI captures economic reality better than AGI alone. It still excludes asset balances, so it is not a perfect wealth measure, but it is closer than what came before.
MAGI vs. AGI: The Difference
Adjusted Gross Income (AGI) is line 11 on your Form 1040. It is your total income minus a specific set of above-the-line deductions: HSA contributions, deductible IRA contributions, student loan interest, half of self-employment tax, and a few others. MAGI starts with AGI and adds three items back. For ACA and Medicaid purposes, those three add-backs are tax-exempt interest, untaxed foreign income, and the non-taxable portion of Social Security benefits.
Warning: the term MAGI shows up elsewhere in the tax code with different definitions. IRA contribution limits use a different MAGI calculation, the Net Investment Income Tax uses another, and the Lifetime Learning Credit uses yet another. The ACA and Medicaid MAGI is its own thing and only matters for health coverage eligibility.
- AGI = Total income minus above-the-line deductions (Form 1040, line 11).
- MAGI (for ACA/Medicaid) = AGI + tax-exempt interest + untaxed foreign income + non-taxable Social Security.
- Household MAGI = the tax filer's MAGI + the MAGI of every dependent required to file a return.
How to Calculate Your MAGI
For most people, MAGI equals AGI because they do not have tax-exempt interest, foreign income, or non-taxable Social Security. To run the calculation yourself, start with your most recent tax return (Form 1040). Take line 11 (AGI), then add line 2a (tax-exempt interest), line 6a minus line 6b (non-taxable portion of Social Security), and any foreign earned income excluded on Form 2555. The total is your MAGI.
For ACA marketplace applications, you project MAGI for the upcoming coverage year, not last year's MAGI. If your income has changed, use a realistic projection. If you are self-employed or have variable income, estimate annual income based on year-to-date earnings divided by months worked, then annualized. Overestimating means you may give back some of the advance tax credit at tax time. Underestimating means you may owe at tax time. Medicaid, by contrast, generally uses current monthly income for ongoing eligibility.
MAGI for Medicaid: Who It Applies To
Most Medicaid applicants are evaluated under MAGI rules: children, pregnant adults, parents and caretaker relatives, and the adult expansion group in states that adopted ACA Medicaid expansion. For these groups, eligibility is based on MAGI relative to the Federal Poverty Level, with no asset test. See does Medicaid cover pregnancy and does Medicaid cover mental health for what MAGI-based Medicaid actually pays for once you qualify.
Non-MAGI Medicaid still exists and uses different rules. Long-term care Medicaid, the Medicaid program for people aged 65 and older, and Medicaid for people receiving Supplemental Security Income (SSI) all use separate income and asset tests. Those programs may count assets, treat Social Security differently, and apply spousal protections. If you are applying for nursing-home Medicaid or aged/blind/disabled Medicaid, MAGI rules likely do not apply to you.
Frequently Asked Questions
What is MAGI in plain English?
MAGI is Modified Adjusted Gross Income. For health coverage purposes, it is your Adjusted Gross Income (line 11 of Form 1040) plus tax-exempt interest, untaxed foreign income, and the non-taxable portion of Social Security benefits. It is the income measure used to decide whether you qualify for ACA premium tax credits or for Medicaid in most cases.
Is MAGI the same as gross income?
No. Gross income is the total you earn before any deductions or adjustments. MAGI starts further down the tax form, after deductions like HSA contributions, deductible IRA contributions, and student loan interest reduce your gross income to your AGI. MAGI then adds back tax-exempt interest, foreign income, and non-taxable Social Security. For most people, MAGI is lower than gross income but higher than taxable income.
Does child support count toward MAGI?
No. Child support payments received are not counted in MAGI for ACA or Medicaid eligibility. They do not appear on your tax return as income, and the ACA explicitly excludes them. This is true whether you receive court-ordered child support or informal payments from a co-parent.
Does Social Security count toward MAGI?
Yes, all of it. Even the portion of Social Security benefits that is not taxable for income tax purposes is added back into MAGI for ACA and Medicaid. This trips up many retirees and people on SSDI who assume only the taxable portion counts. The full annual benefit amount counts.
Does SSI count toward MAGI?
No. Supplemental Security Income (SSI) is a separate program from Social Security retirement and SSDI, and SSI payments are not counted in MAGI. SSI is means-tested and not taxable, and the ACA excludes it from the MAGI calculation.
How do I calculate MAGI for my 2026 marketplace application?
For 2026 coverage, you project your expected 2026 MAGI, not your past income. Start with projected 2026 AGI, then add expected tax-exempt interest, expected non-taxable Social Security, and any foreign earned income you will exclude. If your income is stable, last year's MAGI is a reasonable starting point. If you changed jobs, started a business, or had a major income shift, update your projection on HealthCare.gov so your subsidy is accurate.
What is the household MAGI for marketplace eligibility?
Household MAGI is the sum of the tax filer's MAGI plus the MAGI of every dependent who is required to file their own tax return. A dependent who is not required to file (most teenagers earning under the filing threshold) does not have their income added in. The household income then gets compared to the Federal Poverty Level for your household size to determine subsidy eligibility.
Why does MAGI matter for Medicaid?
Most Medicaid eligibility groups, including children, pregnant adults, parents, and the adult expansion population, are evaluated using MAGI relative to the Federal Poverty Level. There is no asset test for these groups. If your MAGI is at or below the state's Medicaid threshold for your category, you qualify. Non-MAGI Medicaid pathways for elderly or disabled applicants use different rules with asset tests.
