Calculate Modified Adjusted Gross Income for Roth IRA eligibility (2025 phaseout $146k-161k single / $230k-240k married), Medicare IRMAA surcharges ($103k Tier 1 / $206k married, extra $994-$6,004/year Part B/D premiums, 2-year lookback), ACA Premium Tax Credit (400% FPL ~$60k/81k), and student loan income-driven repayment (PAYE/REPAYE/IBR). MAGI = AGI + specific add-backs: Traditional IRA contributions added for Roth IRA, tax-exempt interest for IRMAA/ACA, foreign earned income exclusion, Social Security benefits (partial for ACA). 4 different MAGI calculations for each purpose: Roth IRA MAGI (contribution limit phaseout), Medicare MAGI (IRMAA tier 0-5), ACA MAGI (subsidy eligibility), IDR MAGI (monthly payment). 7 MAGI reduction strategies: max Traditional IRA $7k ($1,540 tax save 22% bracket), HSA $4,300/$8,550 triple tax-advantaged, 401(k) $23,500 reduces W-2 wages, timing capital gains, business expense deductions, QCD $105k (70½+ avoid IRMAA), Roth conversion ladder. Includes 2025 critical thresholds table (Roth/IRMAA/ACA limits), Medicare IRMAA 6-tier table ($0-$6,004/year extra cost), common mistakes (confusing AGI/MAGI, ignoring tax-exempt interest, large Roth conversions before 65, MFS brutal limits $0-$10k). Indigo-Purple-Pink gradient design with 4 separate result cards: AGI calculation, Roth IRA MAGI with phaseout status, Medicare IRMAA tier with monthly/annual cost, ACA eligibility, IDR MAGI. FAQ covers AGI vs MAGI difference, Form 1040 location, Backdoor Roth strategy, IRMAA 2-year lookback, 401(k) reduction, partial phaseout options.
Frequently Asked Questions
What is the difference between AGI and MAGI?
AGI (Adjusted Gross Income) = Total income minus above-the-line deductions (401k, HSA, student loan interest, IRA).
MAGI = AGI plus specific add-backs depending on purpose.
Common add-backs: Traditional IRA deduction (for Roth IRA eligibility), Tax-exempt interest (for Medicare IRMAA and ACA), Foreign earned income exclusion, Passive loss deductions.
Example: $100k gross - $10k 401k - $5k IRA = $85k AGI.
For Roth IRA eligibility: $85k + $5k IRA add-back = $90k MAGI.
Why does MAGI vary by purpose (Roth vs Medicare vs ACA)?
Different programs use different MAGI formulas: Roth IRA MAGI: AGI + IRA deduction + student loan interest + foreign income.
Medicare IRMAA MAGI: AGI + tax-exempt interest + foreign income (looks back 2 years).
ACA Premium Credit MAGI: AGI + tax-exempt interest + foreign income + non-taxable Social Security.
Student Loan IDR MAGI: Usually just AGI, simplest calculation.
Always specify which MAGI you need - being $1 over threshold can cost $1,000+ in lost benefits.
How can I reduce my MAGI to qualify for Roth IRA contributions?
MAGI reduction strategies (2025 single $146k-161k phaseout): Max 401k $23,500 (reduces W-2 wages before AGI), Max HSA $4,300 individual/$8,550 family (triple tax advantage), Defer year-end bonuses to next year, Harvest capital losses to offset gains, Increase business expense deductions.
Example: $163k income needs $2k reduction.
Contribute $2k more to 401k → $161k AGI → eligible for partial Roth contribution.
Cannot use Traditional IRA to reduce Roth MAGI (IRA gets added back).
What is Medicare IRMAA and how does MAGI affect it?
IRMAA (Income-Related Monthly Adjustment Amount) adds surcharges to Medicare Part B and D premiums based on MAGI from 2 years ago. 2025 IRMAA tiers (using 2023 tax return): Tier 0: <$103k single/$206k married = $0 extra, Tier 1: $103k-129k/$206k-258k = +$70/month ($840/year), Tier 2-5: Up to +$419.30/month ($5,032/year).
Example: 2023 MAGI of $104k (just $1k over) = $840/year extra Medicare costs in 2025.
Reduce 2023 MAGI via QCD, Roth conversion timing, capital gains management.
Does 401k reduce my MAGI for all purposes?
YES - 401k contributions reduce MAGI for ALL purposes because they lower your W-2 wages BEFORE AGI calculation.
Example: $150k salary, contribute $23,500 → W-2 shows $126,500 → AGI starts at $126,500.
Benefits: Qualifies for Roth IRA (single threshold $146k), Avoids Medicare IRMAA (threshold $103k if retired), Increases ACA subsidies (lower MAGI = bigger credit), Reduces IDR student loan payments.
This is why 401k is most powerful MAGI reduction tool - unlike IRA which gets added back for Roth eligibility.
What happens if my MAGI is in the Roth IRA phaseout range?
Phaseout ranges (2025): Single $146,000-161,000, Married $230,000-240,000.
Contribution limit reduces proportionally.
Formula: (Upper limit - Your MAGI) / (Range width) × $7,000.
Example: Single with $150,000 MAGI: ($161,000 - $150,000) / $15,000 × $7,000 = $5,133 allowed.
Can contribute partial amount, or use backdoor Roth for full $7,000.
Once MAGI exceeds $161k single/$240k married: $0 direct Roth contribution allowed (must use backdoor Roth instead).
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Editorial & Updates
- Author: SuperCalc Editorial Team
- Reviewed: SuperCalc Editors (clarity & accuracy)
- Last updated: 2026-01-13
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Financial/Tax Disclaimer
This tool does not provide financial, investment, or tax advice. Calculations are estimates and may not reflect your specific situation. Consider consulting a licensed professional before making decisions.