Modified Adjusted Gross Income (MAGI) is used to determine eligibility for premium tax credits and other savings for Marketplace health insurance plans and for Medicaid and the Children's Health Insurance Program (CHIP). For many people, it’s identical to or very close to adjusted gross income.
Modified adjusted gross income is adjusted gross income plus these 3 kinds of income, if any:
- Untaxed foreign income
- Non-taxable Social Security benefits
- Tax exempt interest
MAGI includes these income sources for all household members required to file a tax return.
MAGI does include Supplemental Security Income (SSI). Supplemental Security Income (SSI) is a monthly benefit paid by Social Security to people with limited income and resources who are disabled, blind, or 65 or older. SSI benefits aren't the same as Social Security retirement or disability benefits.
MAGI does not appear as a line on your tax return.
What to include as income
When you fill out a Marketplace application, you’ll need to estimate what your household income is likely to be for the current calendar year.
- In most cases you’ll use your gross income — your total income before taxes and other deductions are taken out. But see details in the chart below to be sure.
- Marketplace savings are based on your expected household income for 2019, not last year’s income. You must make your best estimate so you qualify for the right amount of savings.
- You may have the option to enter your income as monthly or yearly. You may be asked to confirm a yearly amount if we got the information somewhere else.
Whose income to include in your estimate
For most people, a household consists of the tax filer, their spouse if they have one, and their tax dependents, including those who don’t need coverage.
The Marketplace counts estimated income of all household members who are required to file a tax return.
Learn more about who’s counted in a Marketplace household.
What income is counted
The Marketplace uses an income number called modified adjusted gross income (MAGI) to determine eligibility for savings. It’s not a line on your tax return.
The chart below shows common types of income and whether they count as part of MAGI. If you expect income types not shown or have additional questions, see details on what the IRS counts as income.
| Income type | Include as income? | Notes |
|---|---|---|
|
Federal Taxable Wages (from your job) |
Yes |
If your pay stub lists “federal taxable wages,” use that. If not, use “gross income” and subtract the amounts your employer takes out of your pay for child care, health insurance, and retirement plans. |
|
Tips |
Yes |
|
|
Self-employment income |
Yes |
Include “net self-employment income” you expect — what you’ll make from your business minus business expenses. Note: You’ll be asked to describe the type of work you do. If you have farming or fishing income, enter it as either “farming or fishing” income or “self-employment,” but not both. |
|
Unemployment compensation |
Yes |
|
|
Social Security |
Yes |
Include both taxable and non-taxable Social Security income. Enter the full amount before any deductions. |
|
Social Security Disability Income (SSDI) |
Yes |
But do not include Supplemental Security Income (SSI). |
|
Retirement or pension Income |
Yes |
Include most IRA and 401k withdrawals. (See details on retirement income in the instructions for IRS publication 1040). Note: Don’t include qualified distributions from a designated Roth account as income. |
|
Alimony |
Yes |
|
|
Child support |
No |
|
|
Capital gains |
Yes |
|
|
Investment income |
Yes |
Include expected interest and dividends earned on investments, including tax-exempt interest. |
|
Rental and royalty income |
Yes |
Use net rental and royalty income. |
|
Excluded (untaxed) foreign income |
Yes |
|
|
Gifts |
No |
|
|
Supplemental Security Income (SSI) |
No |
But do include Social Security Disability Income (SSDI). |
|
Veterans’ disability payments |
No |
|
|
Worker’s Compensation |
No |
|
|
Proceeds from loans (like student loans, home equity loans, or bank loans) |
No |
Report income changes to the Marketplace
Once you have Marketplace health insurance, it’s very important to report any income changes as soon as possible.
If you don’t report these changes, you could miss out on savings or wind up having to pay money back when you file your federal tax return for the year.
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