MAGI Calculator: How to Calculate Modified AGI for High-Income Families

By Kevin Luu, Co-Founder and Chief Learning Officer. Reviewed on 2026-09-30.

To calculate your MAGI, start with adjusted gross income (AGI), which is line 11a of the 2025 Form 1040, then add back the specific items that the rule you are testing lists. There is no single MAGI: the Roth IRA, the Net Investment Income Tax, the Child Tax Credit and the SALT deduction cap each define it a little differently. For a W-2 household with no foreign income, no tax-exempt savings bond interest and no Roth conversion, MAGI is usually equal to AGI for every test except Medicare premiums.

The worksheet below works like a MAGI calculator you can do on paper, followed by a worked example for a California family earning about $900,000 with RSUs and two young kids, and the one year in which MAGI planning can pay off for a household like that.

MAGI calculator: the 3-step worksheet

1. Find AGI. On the 2025 Form 1040 it is line 11a (on 2022 to 2024 returns it was line 11). AGI is total income (wages, interest, dividends, capital gains, business income) minus the adjustments on Schedule 1, such as a deductible traditional IRA contribution or the student loan interest deduction. Your 401(k) deferrals, payroll HSA contributions and dependent care FSA money are already out of Box 1 wages, so they are already out of AGI.
2. Pick the rule you are testing. Each rule has its own list of add-backs. The table below shows the ones that matter for our readers.
3. Add back only that rule’s items and compare the result to that rule’s 2026 threshold.

MAGI does not appear as a line anywhere on Form 1040. It lives on the worksheet or form for each benefit: Worksheet 2-1 in IRS Publication 590-A for the Roth IRA, Form 8960, line 13 for the Net Investment Income Tax, and Schedule 8812 for the Child Tax Credit.

Sources for the table: IRS Notice 2025-67 (IRA ranges), IRS NIIT page, Rev. Proc. 2025-32 and Schedule 8812 (Child Tax Credit), P.L. 119-21, section 70120 (SALT cap) and 42 U.S.C. 1395r(i)(4) (Medicare).

MAGI, AGI and taxable income are three different numbers

AGI is income after the Schedule 1 adjustments. Taxable income is AGI minus the standard deduction ($32,200 for married couples for 2026) or itemized deductions, and that is the number the brackets apply to. MAGI goes the other way: it starts at AGI and adds items back, so it is never lower than AGI for most tests (the Roth IRA test is the exception, because it removes conversion income).

That is why neither the standard deduction nor charitable gifts, mortgage interest or property tax lower your MAGI. Those come off after AGI. We cover this in more detail in does the standard deduction reduce MAGI.

Worked example: a $900,000 California household with RSUs

Assumptions, for illustration only. A married couple in San Mateo County with two children, ages 4 and 7, filing jointly for 2026:

• Spouse A, an engineer at a large tech company: $280,000 salary plus $320,000 of RSUs vesting during the year. RSUs are taxed as wages when the shares are delivered, so the full $320,000 lands in Box 1.
• Spouse B, a hospital physician: $300,000 salary.
• Both defer the 2026 maximum of $24,500 pre-tax into their 401(k) plans ($49,000 together).
• They put $7,500 through a dependent care FSA, the household limit for 2026.
• Brokerage account: $18,000 of taxable dividends and interest, a $40,000 long-term gain from selling older RSU shares, and $6,000 of California municipal bond interest.
• Each spouse makes a $7,500 nondeductible IRA contribution and converts it to a Roth right away (a backdoor Roth), with no taxable conversion income.

Now run each test:

• Roth IRA MAGI: $901,500. Far above the $252,000 ceiling, so a direct Roth IRA contribution is not allowed. The backdoor Roth is the standard route at this income.
• NIIT MAGI: $901,500. The couple is $651,500 over the $250,000 threshold, so the 3.8% tax applies to the lesser amount, their $58,000 of investment income: $2,204 for 2026.
• Child Tax Credit MAGI: $901,500. Their $4,400 credit for two children phases out completely at $488,000. Credit: $0.
• SALT MAGI: $901,500. Above $606,333, so the cap is the $10,000 floor, not $40,400.
• Medicare MAGI: $907,500 (AGI plus the $6,000 of municipal interest). Not relevant to them yet, but the same formula decides Medicare premiums in retirement, and it applies now to any parent of theirs on Medicare.

One more tax that people often assume runs on MAGI does not: the 0.9% Additional Medicare Tax is based on wages. Their Medicare wages are $892,500 (401(k) deferrals are still subject to Medicare tax, the dependent care FSA is not), which is $642,500 over the $250,000 joint threshold, or $5,782.50 for 2026.

What this means: most MAGI thresholds are already behind you

The takeaway for a household at $600,000 to $1.2 million is that shaving $30,000 or $50,000 off MAGI does not move you across any of these lines. The Roth IRA closes at $252,000, the Child Tax Credit is gone by $488,000 for two kids, and the SALT cap sits at $10,000 from $606,333. Pre-tax 401(k) deferrals, payroll HSA contributions and deferred compensation still lower your tax, but they will rarely change which benefits you qualify for.

The decisions that matter instead are these:

• The backdoor Roth. Many families at this income use it each year. It works cleanly only when pre-tax IRA balances are zero, because otherwise the pro-rata rule makes part of the conversion taxable.
• NIIT as a fixed cost. At this income the 3.8% applies to investment income either way, so the useful questions are where gains land and when shares are sold, not how to get under $250,000.
• The low-income year, described next.

The low year: when MAGI planning can pay off

Many families in our audience have one year when income drops: a spouse takes a sabbatical or goes part-time after a second child, an RSU grant runs out between refreshes, or one parent leaves to join a startup. Suppose that brings AGI, and MAGI, down to $450,000 for 2026.

• SALT cap: MAGI is under $505,000, so the full $40,400 cap applies instead of $10,000. If they itemize and their state income and property taxes exceed $40,400, that is $30,400 more deduction, worth about $7,300 at the 24% federal rate. (After itemizing, taxable income at this level lands near the top of the 24% bracket, which ends at $403,550 for married couples for 2026.)
• Child Tax Credit: $50,000 over the $400,000 threshold reduces the credit by $2,500, so two children still bring $1,900.
• Roth IRA: still closed; the backdoor still applies.

In a year like that, timing matters. Deferring a large stock sale into the following year, or pulling a deferred compensation payout away from it, can keep MAGI under $505,000. The reverse is also true: a big RSU vest or a liquidity event in the same year can erase the benefit. If you hold equity compensation, see how we handle RSU and stock option planning.

California and Washington: state AGI is a separate calculation

Every threshold above is federal. The states do not use MAGI for them, and their own starting points differ.

• California computes its own AGI on Schedule CA. It does not allow the federal HSA deduction (Schedule CA instructions), so payroll HSA money is added back for California. California itemized deductions follow California law rather than the federal SALT cap (FTB 2025 Form 540 booklet), and California taxes capital gains as ordinary income, at up to 13.3% for 2025.
• Washington has no individual income tax for 2026, so there is no state AGI to calculate on wages. It does tax long-term capital gains above an annual standard deduction ($278,000 for 2025, the latest published) at 7%, and 9.9% on taxable gains above $1,000,000 (WA DOR). That changes in 2028, when a 9.9% tax applies to individuals and joint filers with AGI over $1,000,000 (WA Department of Revenue). The definition of income is still pending DOR guidance, but a household at $1.2 million in Washington should expect AGI to become a number worth managing, not just a federal line item.

For how these pieces fit into a full-year plan, see our tax management service.

Common mistakes when calculating MAGI

• Using taxable income. Taxable income is AGI after deductions. Using it can make a household look eligible for a Roth IRA contribution when it is not, which leads to an excess contribution and a 6% excise tax for each year it stays in the account (Pub 590-A).
• Forgetting the RSU vest. Vested RSUs are wages. A family that estimates MAGI from salary alone in January can be off by hundreds of thousands of dollars by December. The 83(b) election does not apply to RSUs.
• Assuming one MAGI fits all. A Roth conversion raises MAGI for NIIT and the SALT cap, but it is subtracted for the Roth IRA test.
• Ignoring tax-exempt interest for Medicare. Municipal bond interest stays out of AGI but is added back for Medicare premiums.

More on these: which line is MAGI on the 1040 and how to reduce MAGI.

What to write down for your kids

A one-page note each spring does more than a perfect spreadsheet: your AGI, which thresholds you were above, and why you did a backdoor Roth instead of a direct one. If you had a low year, write down what you timed and why. In ten years, your children will face the same questions with their own first paychecks and first RSU grants. As Kevin Luu, Co-Founder and Chief Learning Officer of Bright Advisers, puts it: “Your kids don’t need to inherit your portfolio. They need to inherit your decision-making process.” The FamilyKnowledge® System is built around notes like this.

Frequently asked questions

Is MAGI the same as taxable income?

No. Taxable income is AGI minus the standard or itemized deduction, and it is what the tax brackets apply to. MAGI starts from AGI and adds certain items back, so for most families it is higher than taxable income by at least the $32,200 standard deduction (married filing jointly, 2026). For a $900,000 household that itemizes, the gap is usually larger.

Do 401(k) contributions lower MAGI?

Pre-tax 401(k) deferrals do, because they are excluded from Box 1 wages, and AGI starts from Box 1. The same goes for payroll HSA contributions and a dependent care FSA. Roth 401(k) deferrals and after-tax contributions for a mega backdoor Roth do not lower MAGI. For a couple each deferring $24,500 for 2026, MAGI drops by $49,000.

Does the $6,000 senior deduction depend on MAGI?

Yes. For 2025 through 2028, the enhanced deduction for taxpayers 65 and older is up to $6,000 per person, reduced by 6% of MAGI above $150,000 on a joint return or $75,000 for single filers, using MAGI from Schedule 1-A (Form 1040 instructions; P.L. 119-21, section 70103). It matters for grandparents with modest retirement income, not for working parents in our audience.

Which year’s MAGI sets Medicare premiums?

Medicare uses the tax return from two years before the premium year, with MAGI defined as AGI plus tax-exempt interest. A large stock sale or deferred compensation payout in the first years of retirement can raise premiums two years later, which is worth planning for a parent close to 65.

Next step

Pull line 11a from your last return, add your expected RSU vests for this year, and check which of the thresholds above you are near. If a low year is coming, that is the time to plan sales and payouts around it. If you would like a second set of eyes, the Tax & Wealth Assessment takes a few minutes. This is general education, and the right move depends on your family’s full picture.

Written by

Kevin Luu

Co-Founder and Chief Learning Officer, Bright Advisers

Kevin has advised high-income W-2 tech and biotech families since 2015, and leads the education-first Age Five Family Office from Brea, California.

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