The Modified Adjusted Gross Income
On your tax return, Modified Adjusted Gross Income (MAGI) helps decide if you can qualify for certain tax benefits like the Child Tax Credit or deductions for your IRA contributions. You might come across guidelines that refer to income limits based on your modified adjusted gross income (AGI), but what does this actually mean? Let’s break down what MAGI is and why it’s important for your taxes.
How the MAGI Is Calculated?
start The Modified Adjusted Gross Income (MAGI) is used to calculate whether a taxpayer is eligibility or qualified for various tax benefits, deductions, and credits. The basis of the MAGI is the with Adjusted Gross Income (AGI), however certain deductions and exclusings are added back to the AGI such as:
- Foreign earned income exclusion and untaxt foreign income
- Non-taxable Social Security benefits
- Tax-exempt interest income
- Other exclusions depending on the specific tax benefit being calculated
MAGI for Specific Tax Benefits for tax year 2024
- A: IRA Contributions: MAGI determines whether you can deduct contributions to a traditional IRA or contribute to a Roth IRA. For 2024, the deduction phases out for MAGI: $77,000–$87,000 for single/head of household and $123,000–$143,000 for married filing jointly. If you can contribute to a Roth IRA and how much of your contributions you can deduct from a traditional IRA or 401(k)
- B: Premium Tax Credit: Related to the Health Affordable Care Act. MAGI is used to determine eligibility for the PTC. AGI plus untaxed foreign income plus tax-exempt interest, and plus non-taxable Social Security benefits. How much of the Premium Tax Credit (PTC) you are able to claim.
- C: Net Investment Income Tax (NIIT): Applies a 3.8% tax on the lesser of net investment income or the amount by which MAGI exceeds $200,000 for single/head of household or $250,000 for married filing jointly.
- D: The limit for your Child Tax Credit, Adoption Tax Credit, education-related tax credits, and several other credits
- E: Senior discount (max $6,000) when calculating social security income taxes for 2025. Find out your numbers via the eFile.com Social Security Income Tax Calculator.
More details about MAGI
Your modified AGI (Adjusted Gross Income) isn’t listed on Form 1040, but you can use Line 11 to start with your adjusted gross income. To figure out your modified AGI, you'll need to adjust your AGI by considering certain tax deductions and tax-exempt interest. So, while your adjusted gross income is your total income after some adjustments, the modified AGI is another step further in adjustments.
Sound complicated? Don't worry! File online with the eFile Tax App. Our app calculates both your AGI and modified AGI for you. This means you can easily claim all the tax credits and deductions you’re eligible for without needing to be a tax expert.
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Your Adjusted Gross Income (AGI) is a crucial number for determining how much of your income is taxable. It’s your income after taking into account specific deductions, known as adjustments to income. These adjustments can include things like student loan interest payments and Health Savings Account (HSA) contributions.
However, the standard deduction and the Qualified Business Income (QBI) Deduction, if you have self-employment income, are not included in the AGI calculation. Instead, these are subtracted later when calculating your taxable income.
To calculate your Modified Adjusted Gross Income (MAGI), start with your total gross income, calculate your AGI, and then add back any above-the-line deductions.
Here’s a simple breakdown using Form 1040 to see how AGI and MAGI are calculated—note that eFile does this for you automatically:
Step 1: Start with Form 1040 for the current year.
Step 2: Add up all your income listed on lines 1-8, which totals on line 9.
Step 3: Subtract adjustments to income from Schedule 1 to get your AGI, shown on line 11.
Step 4: To find your MAGI, add back those adjustments to your AGI.
Step 5: Next, subtract your standard deduction or itemized deductions, and any QBI deduction if applicable, to get your taxable income.
Step 6: eFile will then apply the tax brackets or rates and calculate your total taxes on line 16.
Your AGI is an important figure when it comes to taxes because it is needed as a form of identity verification when you file your taxes next year - learn more about filing with your AGI so you do not need to scramble to find it this year.
Estimate your taxes here to get an idea of your gross income and adjusted gross income. You can then use this to better understand which credits and deductions you qualify to take, though eFile will determine this and calculate it all for you.
Use online tax filing software like eFile.com to handle these complicated calculations for you. eFile will claim all savings you are qualified for based on simple entries so you do not need extensive tax knowledge file your taxes online.
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