ACA MAGI: the income number the Marketplace uses
Build Marketplace household income from adjusted gross income and the required add-backs without confusing it with ordinary taxable income.
ACA household MAGI generally starts with adjusted gross income and adds back tax-exempt interest, excluded foreign earned income, and the nontaxable portion of Social Security benefits for each required household member.
Start with adjusted gross income
Marketplace MAGI is not gross pay and it is not the taxable income line after the standard deduction. Start with adjusted gross income from the federal return, then apply the ACA-specific additions.
- Tax-exempt interest
- Excluded foreign earned income and housing amounts
- Nontaxable Social Security benefits
Whose income belongs in the household
Include the tax filer, spouse when filing jointly, and tax dependents who are required to file a federal return. A dependent's income is not automatically included merely because the dependent earned money; the filing requirement matters.
Planning moves that can change MAGI
Traditional retirement-plan contributions, deductible IRA contributions, HSA contributions, capital gains, Roth conversions, and business income can change AGI and therefore Marketplace MAGI. The tax treatment and timing must be valid independently of the subsidy result.