MAGI Explained — and Why ACA Subsidies and Medicare IRMAA Don't Count Income the Same Way
"Modified Adjusted Gross Income" sounds like one number. It isn't. The ACA and Medicare each modify your income differently — and they even use different tax years. Reuse the same figure for both and you'll misjudge a subsidy or a Medicare surcharge. Here's both definitions, side by side.
- Both MAGIs start from Adjusted Gross Income (AGI) and add specific items back. There's no "MAGI" line on your 1040.
- ACA MAGI adds tax-exempt interest, excluded foreign income, and non-taxable Social Security — for the current coverage year.
- IRMAA MAGI adds only tax-exempt interest (no Social Security add-back) — and uses your return from two years ago.
- The two biggest gotchas: Social Security counts for ACA but not IRMAA, and IRMAA looks back two years.
What MAGI is
Start with Adjusted Gross Income — line 11 of Form 1040, your total income minus "above-the-line" adjustments. Modified AGI then adds certain items back. The catch is that "certain items" isn't a fixed list: each program writes its own definition. So there's no single MAGI on your tax return — you build the one the program asks for.
ACA MAGI (premium tax credits)
For Marketplace subsidies, MAGI is:
AGI + tax-exempt interest + excluded foreign income + non-taxable Social Security benefits
Two things stand out. First, it adds back the non-taxable portion of Social Security — the part that never made it into your AGI still counts here. Second, it's the income for the coverage year itself: 2026 coverage uses your estimated 2026 MAGI, for your whole tax household. (Source: 26 U.S.C. § 36B.)
IRMAA MAGI (Medicare surcharges)
For the Medicare Income-Related Monthly Adjustment Amount — the surcharge on Part B and Part D for higher earners — MAGI is simpler:
AGI + tax-exempt interest
Note what's missing: Social Security is not added back. And IRMAA uses a two-year lookback — your 2026 premium is set by your 2024 MAGI, the return Social Security has on file. (Source: 42 U.S.C. § 1395r(i); SSA POMS HI 01101.010.)
Side by side
| Component | ACA MAGI | IRMAA MAGI |
|---|---|---|
| Adjusted Gross Income (AGI) | Base | Base |
| + Tax-exempt interest | Yes | Yes |
| + Excluded foreign income | Yes | No |
| + Non-taxable Social Security | Yes | No |
| Whose income | Whole tax household | You (and spouse, if filing jointly) |
| Which tax year | Current coverage year (estimated) | Two years prior (2024 → 2026) |
Use the right one automatically
Our calculators build the correct MAGI for each program, so you don't have to. The ACA Subsidy Calculator uses ACA MAGI; the IRMAA Calculator uses IRMAA MAGI.
Estimate my ACA subsidy →Why it matters
The differences aren't academic — they change real dollars:
- Retirees with Social Security. A couple drawing $40,000 of Social Security, much of it non-taxable, has a much higher ACA MAGI than IRMAA MAGI. Use the IRMAA number to judge an ACA subsidy and you'll badly underestimate your income — and overestimate your credit.
- The year mismatch. Retire in 2025 and your income drops, but your 2026 Medicare IRMAA is still based on your higher 2024 income. A one-time event two years ago (a Roth conversion, a home sale) can push you into an IRMAA tier today.
- Planning moves. A Roth conversion raises both MAGIs, but it hits ACA in the conversion year and IRMAA two years later — so the timing of when it "costs" you is different for each.
Common mistakes
- Reusing one MAGI for both. The single most common error — especially leaving Social Security out of ACA MAGI.
- Using this year's income for IRMAA. IRMAA is two years behind; if a life event lowered your income, file Form SSA-44 to have Social Security use the newer figure.
- Looking for a "MAGI" line. There isn't one. Start from AGI (line 11) and add the program's specific items.
Frequently asked questions
Does Social Security count for ACA subsidies?
Yes — ACA MAGI includes your full Social Security benefits, even the non-taxable part. IRMAA does not add it back.
What year's income does IRMAA use?
Two years prior — 2026 premiums use 2024 MAGI. If your income has since dropped due to a life event, request a reconsideration with Form SSA-44.
Is there a MAGI line on Form 1040?
No. Both MAGIs are computed from AGI (line 11) plus program-specific add-backs.
Which MAGI is bigger?
For most people with Social Security, ACA MAGI is larger (it adds benefits back). For others they can be similar — but the two-year timing difference still applies to IRMAA.
Sources
- IRS — Publication 974 and HealthCare.gov: what to include as income (ACA MAGI)
- Social Security Administration — Medicare premiums & higher-income beneficiaries and Form SSA-44 (IRMAA MAGI & the two-year lookback)
- Statute — 26 U.S.C. § 36B (ACA); 42 U.S.C. § 1395r(i) (IRMAA)
We keep both definitions explicit in code — see our methodology. Educational only, not tax advice.