What is Modified Adjusted Gross Income (MAGI)?
Definition Modified adjusted gross income is your AGI with certain deductions and excluded income added back, and the exact add-backs depend on which tax provision you are testing. Different rules use MAGI to decide eligibility for things like Roth IRA contributions, IRA deductibility, education credits, the premium tax credit, and the net investment income tax. Because the definition varies, MAGI must be recomputed for each provision.
MAGI thresholds quietly gate many benefits, so a small income change near a threshold can have an outsized effect on what a client qualifies for.