How to Find Your AGI and MAGI: A Guide for High-Income W-2 Families

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

Your adjusted gross income (AGI) is your total income for the year minus a short list of “above the line” adjustments, and it is printed on your Form 1040 on the line labelled “adjusted gross income.” For a W-2 family, the fastest way to find it is to add Box 1 of every W-2 to your interest, dividends and capital gains, then subtract any adjustments. Your modified adjusted gross income (MAGI) is that same AGI with a few items added back, and the items depend on which rule is asking: for most W-2 families with no foreign income, MAGI for the 3.8% net investment income tax, the child tax credit and the SALT cap is simply your AGI.

Taxable income is a different, smaller number: AGI minus your standard or itemized deduction. Confusing the two is a common mistake when families check whether they qualify for something.

Why AGI matters more at $750k than at $150k

At a household income of $750,000 to $3 million, AGI is rarely about whether you qualify for a benefit. It is about how many benefits you have already lost, and which thresholds are still close enough to matter. For 2026, a married couple filing jointly in this income range is typically:

• Above the Roth IRA limit. Direct Roth IRA contributions phase out between $242,000 and $252,000 of MAGI for joint filers in 2026, so the route is a backdoor Roth (IRS Notice 2025-67).
• Past the child tax credit. The $2,200 per child credit for 2026 shrinks by $50 for each $1,000 of MAGI over $400,000. With two children, it reaches zero at $488,000 (IRS child tax credit page).
• Back at the old SALT cap. The 2026 SALT cap of $40,400 is cut by 30% of MAGI over $505,000 and never falls below $10,000. At MAGI of about $606,333 or more, the cap is $10,000 (P.L. 119-21, section 70120).
• Paying the 3.8% net investment income tax. It applies to the smaller of your investment income or your MAGI over $250,000 (joint) (IRS NIIT page).

So the useful question for this reader is not “what is my MAGI?” but “which threshold is my MAGI near this year, and is any decision still open?” The answer changes with RSU vests, bonuses and investment sales.

How to find your AGI from your W-2s, step by step

1. Start with Box 1 of each W-2. Box 1 already excludes pre-tax 401(k) deferrals, payroll HSA contributions, dependent care FSA money, pre-tax health premiums and pre-tax commuter benefits. It already includes RSU income: shares that vested during the year are taxed as wages at their value on the vest date. Roth 401(k) and after-tax (mega backdoor) contributions are not subtracted, so they do not lower Box 1.
2. Add investment income from your 1099s: taxable interest, ordinary dividends and net capital gains from brokerage accounts, including any shares sold after an RSU vest or an ESPP purchase.
3. Add everything else that is taxable: K-1 income from a fund or partnership, rental income, a spouse’s consulting income, taxable state refunds if you itemized last year.
4. Subtract above-the-line adjustments. For most W-2 households at this income, the list is short: HSA contributions made outside payroll, and a deductible traditional IRA contribution only if neither spouse is covered by a workplace plan (in 2026, the deduction for a covered contributor phases out between $129,000 and $149,000 joint, per Notice 2025-67).
5. The result is AGI. Check it against the “adjusted gross income” line on last year’s Form 1040 to see whether you are in the same range.

Which MAGI applies to which rule

There is no single MAGI. Each rule defines its own. For a W-2 family, the differences are small but worth knowing.

The point many families miss: the standard deduction and itemized deductions never reduce AGI or MAGI. They only reduce taxable income. A large charitable gift lowers your tax but does not bring you back under any of the thresholds above.

Worked example: a California couple with RSUs

Assumptions (hypothetical, 2026, married filing jointly, two children ages 3 and 7, no foreign income, standard deduction for simplicity):

• Priya, a physician: salary $420,000.
• Daniel, a biotech scientist: salary $310,000 plus $180,000 of RSUs that vested during the year.
• Pre-tax payroll: two 401(k) deferrals of $24,500 each ($49,000), a family HSA of $8,750, a dependent care FSA of $7,500 and $9,600 of health premiums. Total: $74,850.
• Brokerage account: $6,000 of interest, $10,000 of qualified dividends and $24,000 of long-term gains from selling vested shares.

What that AGI means for this family in 2026:

• Net investment income tax: the smaller of $40,000 of investment income or $625,150 of MAGI over $250,000 is $40,000. At 3.8%, that is $1,520.
• Child tax credit: zero. MAGI is far above the $488,000 point where two children’s credits are fully phased out.
• SALT cap: $10,000, because MAGI is above about $606,333.
• Roth IRA: no direct contribution for either spouse; a backdoor Roth of up to $7,500 each (the 2026 IRA limit) is the usual route, and each spouse’s conversion stays fully tax-free only if that spouse has no pre-tax IRA balances that would make it partly taxable.
• Bracket: ordinary taxable income (after setting aside the $34,000 of qualified dividends and long-term gains) is $808,950, above the $768,700 start of the 37% bracket for joint filers in 2026. The dividends and gains are taxed at 20%, since taxable income is above $613,700, plus the 3.8% NIIT.

Notice what moved AGI and what did not. The two 401(k) deferrals, the HSA and the dependent care FSA together removed $65,250 from AGI (the health premiums another $9,600). The RSU vest added $180,000 that the family had no control over once the grant was made. None of this changes the child tax credit or SALT outcome, because the family is well past both thresholds either way. That is typical at this income: the decisions that matter are the ones that reduce tax at 37% plus state tax, not the ones that chase a phase-out.

California and Washington: the state number is not always federal AGI

California starts from federal AGI and then adjusts it on Schedule CA (540). California does not recognize HSAs, so employer and payroll HSA contributions (W-2 Box 12, code W) are added back to California income, and HSA interest and earnings are taxed by California each year (FTB 2025 Schedule CA instructions). In the example above, that alone puts California income $8,750 higher than federal AGI, at $883,900. California also generally does not conform to the 2025 federal tax law (OBBBA) that raised the dependent care FSA limit to $7,500 (FTB 2025 Form 540 booklet), so the $2,500 above the old $5,000 limit may also be taxable in California for 2026. FTB had not published 2026 instructions when this was reviewed. California also taxes capital gains as ordinary income, with no lower rate (FTB), so the $24,000 gain is taxed at this family’s marginal California rate (10.3% under the 2025 joint brackets, the latest FTB has published, which apply from $742,958 to $891,542 of taxable income) (FTB 2025 tax rate schedules).

Washington has no individual income tax for 2026, so AGI has no state effect this year. That changes for high earners: Washington enacted a 9.9% tax on individuals and joint filers with AGI over $1,000,000, effective January 1, 2028, with first returns due in April 2029 (WA DOR). The details of how income is defined are still pending DOR guidance. For a Seattle-area family whose AGI sits just under or over $1,000,000 in a heavy RSU year, AGI will become a planning number in Washington too. Separately, Washington’s 7% capital gains tax applies to long-term gains above a standard deduction ($278,000 for 2025, the latest published), so the example family’s $24,000 gain would not trigger it.

What actually lowers AGI for a W-2 household

• Pre-tax 401(k) deferrals ($24,500 per person for 2026). Roth 401(k) deferrals do not lower AGI. At a 37% federal bracket plus California tax, many families at this income lean pre-tax, but the right split depends on expected income in retirement and the state you plan to retire in.
• A payroll HSA ($8,750 family for 2026, with an HDHP). Lowers federal AGI, but not California income.
• A dependent care FSA ($7,500 per household for 2026, if your employer’s plan has adopted the higher limit). For parents paying for daycare, preschool or after-school care, this is usually the easiest federal AGI reduction available. California may only exclude the first $5,000 (see above).
• Deferred compensation elections, if your employer offers a nonqualified plan. Pay deferred is not in that year’s W-2 wages, but it carries employer credit risk and must be elected in advance.
• Harvesting investment losses to offset gains from selling RSU shares.

What does not lower AGI: charitable gifts, mortgage interest, property tax, the standard deduction, Roth contributions, and after-tax 401(k) contributions. For more on that distinction, see does the standard deduction reduce MAGI and how to reduce modified adjusted gross income.

Common mistakes when checking AGI or MAGI

• Using taxable income instead of AGI to check Roth IRA eligibility. A couple with $260,000 of AGI and about $228,000 of taxable income is above the Roth phase-out, not under it.
• Forgetting the RSU vest. Families often estimate AGI from salaries and miss that vested RSUs are already in Box 1. A big vest in December can push MAGI over a threshold you thought you were under.
• Treating the 22% RSU withholding as the tax. Federal withholding on supplemental wages is often the 22% optional flat rate (37% is mandatory above $1,000,000 for 2026), while the marginal federal rate for this family is 37%. The gap shows up as a balance due in April (IRS Pub 15).
• Doing a backdoor Roth with old pre-tax IRA money. Pre-tax IRA balances, including a rolled-over 401(k), make part of the conversion taxable under the pro-rata rule (Pub 590-A). See withdrawing non-deductible IRA contributions.
• Looking for MAGI on the tax return. Form 1040 shows AGI, not MAGI. See which line is MAGI on Form 1040.

What to write down for your family

Once a year, record three numbers next to the return: AGI, taxable income, and which thresholds you were above (Roth IRA, child tax credit, SALT, NIIT, and in Washington from 2028 the $1,000,000 AGI line). Add one sentence on why you chose pre-tax or Roth in your 401(k) that year. It takes ten minutes, and it gives your spouse, your CPA and eventually your children the reasoning behind the decision, not just the outcome. Conversations fade. Documentation compounds.

Frequently asked questions

Is AGI on my W-2?

No. A W-2 shows wages for one job. Box 1 is the starting point because it already excludes pre-tax 401(k), HSA, dependent care FSA and health premium deductions, and already includes vested RSUs. AGI combines Box 1 from every W-2 in the household with interest, dividends, capital gains and other income, minus any above-the-line adjustments.

Is MAGI always higher than AGI?

Usually equal or higher, because most definitions add items back. The Roth IRA version is the exception worth knowing: it removes income from a Roth conversion, so converting a non-deductible IRA contribution in a backdoor Roth does not raise your Roth eligibility MAGI. For a W-2 family with no foreign income, MAGI for NIIT, the child tax credit and the SALT cap equals AGI.

Can a high-income family get under the child tax credit threshold?

Rarely. For 2026, two children’s credits reach zero at $488,000 of MAGI for joint filers. A household earning $800,000 would need to remove more than $300,000 from AGI, far more than 401(k), HSA and dependent care FSA allow. At this income, those tools are worth using for the 37% bracket savings, not for the credit.

Next step

Pull last year’s Form 1040 and both spouses’ final pay stubs for this year, add the RSU vests still scheduled before December 31, and estimate this year’s AGI. If it lands near a threshold that matters to you, that is the time to adjust 401(k) or HSA elections, not in April. If you want a second set of eyes on the full picture, the Tax & Wealth Assessment from our tax management team covers it, and our retirement and employee benefits team reviews 401(k), HSA and FSA elections.

This is general education, and the right move depends on the 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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