The many MAGIs: one income, five different tests

Last reviewed July 2026 · 5 min read

Search your Form 1040 for a line called “modified adjusted gross income” and you will not find one. MAGI is not a single number — it is a family of numbers. Each section of the tax and benefits code that says “modified AGI” defines its own version, starting from your adjusted gross income (AGI) and adding back a different set of items. The same year of income can pass one MAGI test and fail another. Here are the five versions retirees run into most.

1. ACA premium subsidies

The marketplace subsidy MAGI is AGI plus tax-exempt municipal bond interest, plus the untaxed portion of Social Security benefits, plus excluded foreign earned income. The Social Security add-back is the one that surprises people: even benefits that never appear in your taxable income count against the subsidy. Post-2025, this MAGI faces a hard cliff at 400% of the federal poverty level — for 2026 coverage, roughly $84,600 for a household of two — above which the subsidy is zero.

2. Medicare IRMAA

The IRMAA surcharge MAGI is AGI plus tax-exempt interest — but not untaxed Social Security. It is also the only test with a time machine: your premium this year is set by your MAGI from two years earlier. For 2026, surcharges begin when that lookback MAGI exceeds $109,000 (single) or $218,000 (joint), in cliff-style tiers where one extra dollar can cost a couple roughly $2,300 a year.

3. Net Investment Income Tax

The 3.8% NIIT applies to investment income to the extent MAGI exceeds $250,000 (joint) or $200,000 (single). Here MAGI is simply AGI unless you have excluded foreign earned income — no muni-interest or Social Security add-backs. Two other quirks: the thresholds are fixed by statute and never inflation-adjusted, so each year more people drift across them; and the tax is marginal rather than a cliff — crossing by a dollar costs about four cents, not thousands.

4. Traditional IRA deduction

If you (or your spouse) are covered by a workplace retirement plan, the deduction for a traditional IRA contribution phases out over a MAGI band. For 2026 that band is $81,000–$91,000 for covered single filers, $129,000–$149,000 for a covered spouse filing jointly, and $242,000–$252,000 when your spouse is covered but you are not. This MAGI adds the IRA deduction itself back to AGI, along with items like the student loan interest deduction. Unlike IRMAA or the ACA cliff, it is a smooth ramp: partial deductions survive inside the band.

5. Roth IRA eligibility

Direct Roth IRA contributions phase out over $153,000–$168,000 of MAGI for single filers and $242,000–$252,000 for joint filers for 2026 (and a punitive $0–$10,000 if married filing separately). This version has the most useful wrinkle of the five: income from a Roth conversion is subtracted out. Converting does not push you over the Roth contribution limit — a deliberate carve-out that also makes the backdoor Roth mechanics work.

Why the differences matter

A Roth conversion counts fully against the ACA, IRMAA, and NIIT tests but is ignored by the Roth-eligibility test. Municipal bond interest is invisible to NIIT and the IRA tests but counts for ACA and IRMAA. Untaxed Social Security counts only for the ACA. And the shapes differ: ACA and IRMAA are cliffs where one dollar is expensive, NIIT and the phase-outs are ramps where one dollar is cheap. Planning “to a MAGI target” only works if you know which MAGI the test in front of you uses.

Try it in Deorbit Plan

The simulator computes the MAGI variants that drive real dollars in retirement: the ACA/IRMAA MAGI (AGI with untaxed Social Security added back) and the NIIT MAGI (AGI). The Taxes & MAGI chart on the dashboard draws your MAGI line against the ACA 400%-FPL cliff and the IRMAA tier thresholds year by year, with NIIT folded into the federal tax bars. In the Strategy panel, the “stay this far below the nearest cliff” margin caps Roth conversions so MAGI keeps a buffer under whichever boundary — ACA or IRMAA — is nearest that year.

Educational content only — not financial, tax, or investment advice.

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