Modified Adjusted Gross Income (MAGI) Calculator
Calculation Result:
Your MAGI: $0.00
What is Modified Adjusted Gross Income (MAGI)?
Modified Adjusted Gross Income (MAGI) is a tax metric used by the IRS to determine your eligibility for specific tax deductions, credits, and retirement contribution limits. It essentially takes your Adjusted Gross Income (AGI) and adds back certain "disallowed" deductions and excluded income types.
Why MAGI Matters
While your AGI determines your overall tax liability, your MAGI is the benchmark for:
- Health Insurance Subsidies: Eligibility for premium tax credits under the Affordable Care Act (ACA).
- IRA Contributions: Determining if you can deduct Traditional IRA contributions or if you are eligible to contribute to a Roth IRA.
- Education Credits: Eligibility for the American Opportunity and Lifetime Learning Credits.
- Child Tax Credit: Income phase-out thresholds.
How to Calculate MAGI
The standard formula for calculating MAGI is as follows:
Example Calculation
Suppose an individual has the following financial profile:
- Adjusted Gross Income (AGI): $65,000
- Student Loan Interest Deducted: $2,500
- Tax-Exempt Municipal Interest: $500
To find the MAGI, you add the deductions back to the AGI:
$65,000 (AGI) + $2,500 (Student Loan) + $500 (Interest) = $68,000 (MAGI)
The Difference Between AGI and MAGI
Adjusted Gross Income (AGI) is your total gross income minus "above-the-line" deductions like health savings account contributions and educator expenses. For many taxpayers, MAGI and AGI are exactly the same number. However, if you have foreign income or specific educational deductions, the MAGI will be higher than the AGI.