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Modified Adjusted Gross Income (MAGI)
How to figure out a consumer’s MAGI
Published September 2015
What is MAGI?
MAGI is a calculation of a consumer’s income that the Marketplace uses to determine their eligibility for
Marketplace financial help or Medicaid. It’s a consumer’s taxable income (Gross Income—GI), adjusted for
certain deductions (Adjusted Gross Income—AGI), then modified by adding some deductions back in (Modified
Adjusted Gross Income—MAGI). Most consumers’ AGI and MAGI will be the same amount.
How can I figure out MAGI for the consumer?
Use the 4 steps on this worksheet to find the MAGI for the year their coverage will be in place. However:
If the consumer has their federal tax return for the current year, skip Steps 1-3 and use the AGI listed on their
tax form (see line 4 on IRS form 1040EZ, see line 21 on IRS form 1040A, see line 37 on IRS form 1040)
If the consumer is applying for Medicaid, calculate the additional adjustment after Step 4
If there are words on this worksheet that you aren’t familiar with, refer to the glossary on pages 3-4.
Calculate Gross Income
Step 1:
This includes:
Amount:
Add together all
sources of taxable
income for the
household
Wages, salaries and tips
$
Taxable interest, pensions, annuities and IRA distributions
$
Taxable Social Security benefits, refunds, credits or offsets of
state and local income taxes
$
Business income, farm income, capital gain and rental income
$
Winnings from gambling activities
$
(do not include Veteran’s
disability payments,
workers’ compensation
or child support
received)
Step 1 total:
Step 2:
Add together all
other sources of
income
Alimony received
$
Life insurance payments
$
Welfare and unemployment benefits
$
Royalties, partnerships, trusts and inheritance
$
Other income
$
Step 2 total:
Step 1 total
+
(plus)
Step 2 total
=
(equals)
Gross Income
continue on next page
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Calculate the Adjusted Gross Income (AGI)
This includes:
Amount:
Certain self-employed expenses
$
Step 3:
Student loan interest deductions
$
Add together all
allowable deductions
Alimony paid
$
IRA deductions (from traditional IRA)
$
Moving expenses related to job relocation
$
Domestic production deductions
$
Certain business expenses of Armed Forces reservists,
performing artists, or fee-basis government officials
$
Step 3 total:
Gross Income
—
(minus)
Step 3 total
=
(equals)
AGI
Calculate the Modified Adjusted Gross Income (MAGI)
Step 4:
Add back certain
income, if applicable
This includes:
Amount:
Non-taxable Social Security benefits
$
Tax-exempt interest
$
Foreign-earned income and housing expenses
$
Step 4 total:
AGI
+
(plus)
Step 4 total
=
(equals)
MAGI
If a consumer is not applying for Medicaid, you’re done.
If a consumer is applying for Medicaid, make this additional adjustment to their MAGI
Medicaid applicants can take the 2 extra deductions listed below. If either of these deductions apply to your
consumer:
1. Take the MAGI from Step 4 and subtract:
Scholarships, awards or fellowship grants for education (not living) expenses
Certain American Indian and Alaska Native income from distributions, payment ownership interest,
real property usage, rights and student financial assistance
2. Use the adjusted amount as their MAGI
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Words to know when calculating MAGI
These are some finance and insurance words you may need to know when finding a consumer’s MAGI. For
full details, consult Internal Revenue Service (IRS) rules at www.irs.gov or consult a financial professional.
A
djusted Gross Income (AGI) – Gross Income
minus deductions for things such as alimony
paid or moving expenses
A
limony – Money a court orders one spouse
to pay to the other spouse after they divorce
A
nnuity – A fixed amount of money that is
paid to a person each year, often from an
insurance policy or investment
B
usiness expenses – The costs of carrying on
a trade or business
B
usiness profits – Money a business makes
from selling products or services after
business expenses are paid
C
apital gain – Money a person gains when
they sell a capital asset, as compared to the
price they originally paid for it. A capital asset
is almost anything a person owns or uses
for personal or investment purposes, such
as a house, furniture or stocks and bonds.
If a person gets a capital asset as a gift or
inheritance, see IRS publication 551, Basis of
Assets, at http://www.irs.gov/publications/
p551/index.html
C
ertain business expenses of Armed Forces
reservists, performing artists and fee-basis
officials – To see which expenses qualify, see
IRS publication 529, Miscellaneous Deductions,
at www.irs.gov/publications/p529/ix01.html
C
ertain self-employed expenses – To see
which expenses qualify, see IRS publication
535, Business Expenses, at http://www.irs.
gov/publications/p535/index.html
C
ertain American Indian and Alaska Native
income – See CMS fact sheet at http://go.cms.
gov/1jvOOcp
D
omestic production deductions –
Tax deductions for businesses that do
manufacturing, construction and other
production activities in the U.S.
F arm income – Money a person makes or loses
operating a farm
Fellowship grant – Money a person gets for the
purpose of study or research
Foreign-earned income – Money a person
earns in a foreign country if they are a U.S.
citizen or a resident alien of the U.S. who is
living abroad. For eligibility, see IRS publication
54, Tax Guide for U.S. Citizens and Resident
Aliens Abroad, at
http://www.irs.gov/pub/irs-pdf/p54.pdf
G ross Income (GI) – All income a person gets
in the form of money, goods, property and
services that is not exempt from tax
I nheritance – Money, property or other assets
that a person passes on to another person
when they die
I nterest – A fee paid to a person for the use of
their money, such as the 1% interest a person
might get from the bank where they keep a
savings account
I RA (Individual Retirement Arrangement) – A
plan that allows a person to save money for
retirement. See IRS rules about deducting
contributions to a traditional IRA. People
cannot take deductions for the other type of
IRA, called the Roth IRA.
I RA deductions – Tax deductions for the
amount a person contributes to their IRA
I RA distributions – Money that a person
withdraws from their IRA
Life insurance payments – Money paid to a
person when someone who has a life insurance
policy dies and has named that person as their
beneficiary
M odified Adjusted Gross Income (MAGI) –
A calculation that is a consumer’s taxable
income (Gross Income), adjusted for certain
deductions (Adjusted Gross Income) and then
modified by adding some deductions back in
(Modified Adjusted Gross Income—MAGI). The
Marketplace will add up the MAGI for each
earner in a household to get their household
income and determine their eligibility for
Marketplace financial help or Medicaid.
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M
oving expenses – Money a person spends
on a job-related move. To see which expenses
qualify, see IRS publication 521, Moving
Expenses, at http://www.irs.gov/publications/
p521/
N
on-taxable Social Security Benefits – See
“Social Security Benefits”
P
artnership – In general, a business that has
two or more members and is not incorporated
P
ension – A retirement account, maintained by
an employer, that pays a person a fixed amount
of money when they retire
R
efunds, credits or offsets of state and local
income taxes – Money a person gets back from
a state or local government if they overpaid
their state or local taxes, or if they chose to
apply some of a prior-year refund to their
current year’s estimated state or local income
tax
R
oyalties – Money a person gets from someone
who wants to use a property, patent or
copyrighted work or franchise that the person
legally owns
S ocial Security Benefits – Money a person gets
from Social Security. To find out which benefits
are taxable or non-taxable, see IRS tax topic
423, Social Security and Equivalent Railroad
Retirement Benefits, at http://www.irs.gov/
taxtopics/tc423.html
S tudent loan interest deductions – Tax
deductions for interest a person pays on a
qualified student loan
Tax-exempt interest – Interest earned by taxfree securities or bonds a person owns
Trust – In general, a financial relationship
where one person has title to property and
must keep or use the property for the benefit
of someone else
U nemployment benefits – Payments a person
gets from the government or labor union when
they are unemployed
Welfare benefits – Payments a person gets
from a public welfare fund based on their need
To learn more
IRS (Internal Revenue Service):
Online: www.irs.gov
Call toll-free Monday-Friday, 7 am-7 pm. Call 1-800-829-1040 (TTY 1-800-829-4059).
Health Insurance Marketplace:
Online: www.healthcare.gov for English or https://cuidadodesalud.gov for Spanish
Call the toll-free Marketplace call center open 24 hours a day, 7 days a week. Call
1-800-318-2596 (TTY 1 855-889-4325).
National Health Law Program’s Advocates’ Guide to MAGI:
Online: http://www.healthlaw.org/publications/agmagi#.VgFqBMtViko
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