Modified Adjusted Gross Income (MAGI)
Definition
Your Adjusted Gross Income (AGI) with certain deductions added back in, such as student loan interest, IRA contributions, and foreign earned income exclusion. MAGI is used to determine eligibility for Roth IRA contributions, premium tax credits under the ACA, education credits, and the deductibility of traditional IRA contributions. The specific add-backs vary depending on which tax benefit is being evaluated.
Example
Your AGI is $140,000 and you deducted $3,000 in student loan interest and $6,000 in IRA contributions. For Roth IRA eligibility purposes, your MAGI would be $149,000, which is under the $161,000 single-filer phase-out threshold for 2025.
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