MAGI: the income the Marketplace counts
Your tax credit is based on one number, your modified adjusted gross income. Here is what goes into it.
Last checked October 15, 2026 · Written by licensed advisors · Sources are numbered and listed under Notes and sources
The short answer
MAGI, modified adjusted gross income, is the income figure the Marketplace uses to decide your tax credit and whether you qualify for Medicaid. For most people it is close to the adjusted gross income on their tax return.1
What it adds back
For Marketplace savings, MAGI is your adjusted gross income plus three things that are not taxed: Social Security benefits that are not taxable, tax-exempt interest, and foreign income you excluded.
It counts everyone in your tax household who has to file a tax return, not only you.2
What lowers it
Because MAGI starts from adjusted gross income, pre-tax money lowers it: contributions to a traditional IRA, a 401(k) through payroll, a SEP-IRA, or a health savings account. For self-employed people, business expenses and half of the self-employment tax come off before AGI too.
Near the 2027 limit of 4 times the poverty level, that can decide whether you get a credit at all. Ask your tax professional what applies to you.34
- Traditional IRA
- 401(k) through payroll
- SEP-IRA
- Health savings account
- Business expenses (self-employed)
- Half of self-employment tax
How to estimate yours
Start from last year’s adjusted gross income, then adjust for what you expect to change this year: a raise, a new client, a job ending. If your income moves around, estimate carefully and update it during the year.5
- 1. StartLast year’s adjusted gross income
- 2. AdjustA raise, a new client, a job ending
- 3. UpdateReport changes during the year (key step)
What to do: Put your estimate into the plan finder to see where it lands against the poverty level.
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Obamacare Hotline and/or Medicare Po Polsku are private companies not affiliated with any local, state, or federal government agency. This guide is general information, not tax or legal advice.