Modified Adjusted Gross Income under the Affordable Care Act

what is adjusted gross income mean


Under the Affordable Care Act, eligibility for income-based Medicaid 1 and subsidized health insurance through the Marketplaces is calculated using a household’s Modified Adjusted Gross Income (MAGI). The Affordable Care Act definition of MAGI under the Internal Revenue Code 2 and federal Medicaid regulations 3 is shown below. For most individuals who apply for health coverage under the Affordable Care Act, MAGI is equal to Adjusted Gross Income. This document summarizes relevant federal regulations; it is not personalized tax or legal advice. Consult the Health Insurance Marketplace for your state, your local Medicaid agency, or a legal or tax advisor for assistance in determining your MAGI.

Modified Adjusted Gross Income (MAGI) =

Adjusted Gross Income (AGI)

Line 4 on a Form 1040EZ

Line 21 on a Form 1040A

  • Wages,

    salaries, tips, etc.

  • Taxable interest
  • Taxable amount of pension, annuity or IRA distributions and Social Security benefits 4
  • Business income, farm income, capital gain, other gains (or loss)
  • Unemployment compensation
  • Ordinary dividends
  • Alimony received
  • Rental real estate, royalties, partnerships, S-corporations, trusts, etc.
  • Taxable refunds, credits, or offsets of state and local income taxes
  • Other income

Note: Check the IRS website for detailed requirements for the income and deduction categories above. Do not include Veterans’ disability payments, workers’ compensation or child support received. Pre-tax contributions, such as those for child care, commuting, employer-sponsored health insurance, flexible spending accounts and retirement plans such as 401(k) and403(b), are not included in AGI but are not listed above because they are already subtracted out of W-2 wages and salaries.


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