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Income Tax Basics
Modified Adjusted Gross Income (MAGI)
AGI with certain deductions added back, used for eligibility tests.
MAGI starts with AGI and adds back certain excluded income. The exact calculation varies by context.
Common MAGI Adjustments
| Add back to AGI | Used for |
|---|---|
| Foreign earned income exclusion | Roth IRA eligibility |
| Tax-exempt interest | Medicare premium surcharges |
| Non-taxable Social Security | Premium tax credits (ACA) |
Key MAGI Thresholds (2025)
| Threshold | Single | MFJ | Purpose |
|---|---|---|---|
| $200,000 | $250,000 | — | NIIT (3.8% surtax) |
| $200,000 | $250,000 | — | Additional Medicare Tax (0.9%) |
| $146,000–$161,000 | $236,000–$246,000 | — | Roth IRA contribution phase-out |
| $87,000 | $230,000 | — | Traditional IRA deductibility phase-out |
| $500,000+ | $500,000+ | — | SALT deduction phase-out |
For most taxpayers, MAGI equals AGI. The adjustments only matter if you have foreign income or certain exclusions.
Sources
More in Income Tax Basics
Tax Brackets
Progressive rate tiers applied to taxable income.
Marginal Tax Rate
The tax rate on your next dollar of income.
Effective Tax Rate
Your average tax rate across all income.
Taxable Income
Income remaining after deductions, subject to tax.
Adjusted Gross Income (AGI)
Gross income minus above-the-line deductions.
Filing Status
Determines your bracket thresholds and standard deduction.
Marriage Penalty & Bonus
Tax impact of filing jointly vs. two singles.
Tax Cuts and Jobs Act (TCJA)
2017 law that lowered rates and doubled the standard deduction.