Do investment, pension, or capital gains count under 2026 MAGI for Medicaid or Marketplace subsidies?

1. How MAGI for Medicaid and Marketplace is defined and why that matters

The Affordable Care Act and federal guidance use a MAGI definition for premium tax credits and most Medicaid categories that starts with an individual’s AGI and then adds only tax‑exempt interest, non‑taxable Social Security benefits, and excluded foreign income when applicable, meaning the MAGI that determines Marketplace subsidies and Medicaid eligibility is essentially AGI in most cases ^{[2] [1] [3]}.

2. Investment income and capital gains: counted unless nontaxable

Taxable investment income—ordinary dividends, interest, and realized capital gains—flows into AGI and therefore counts toward MAGI used for subsidies and eligibility; planning writeups and state guidance explicitly name capital gains and dividends as sources that affect MAGI calculations and subsidy exposure ^{[4] [5] [6]}. Tax‑exempt interest is a specific add‑back to AGI for MAGI purposes, which can make municipal bond income count even though it isn’t taxed in AGI ^{[2] [1]}.

3. Pensions and retirement distributions: included when taxable

Defined‑benefit pensions, taxable annuity or IRA/401(k) distributions and similar retirement income generally appear in AGI and therefore raise MAGI for Marketplace and Medicaid tests; state MAGI guidance and practitioner summaries list pensions and retirement withdrawals among the countable income types used to determine eligibility ^{[7] [4]}.

4. Common exceptions and planning levers to lower MAGI

There are important exceptions: Roth IRA qualified distributions are tax‑free and typically do not increase AGI (so generally do not raise MAGI), and certain non‑taxable items (some Social Security benefits when non‑taxable, specific foreign income exclusions) are handled via MAGI’s defined add‑backs rather than AGI itself ^{[4] [1]}. Tax planning strategies cited by advisers—timing capital gains, using tax‑deferred accounts, charitable giving, HSA or retirement contributions when eligible—are repeatedly recommended because shifting income between tax years or account types can alter AGI and therefore MAGI ^{[5] [8] [9]}.

5. Why some reporting focuses on Medicare but the MAGI principle is the same

Many recent articles about IRMAA and Medicare premiums explain that capital gains, pensions, dividends and similar income feed into MAGI and therefore affect benefit surcharges; those IRMAA explanations reinforce the same accounting point that underlies ACA/Medicaid MAGI—taxable investment and retirement income normally increase the MAGI calculation ^{[10] [4] [8]}. It is important to distinguish the specific add‑backs used for different programs (Medicare IRMAA uses MAGI from a prior tax year for surcharges, while Marketplace/Medicaid use current‑year MAGI for eligibility), but the core fact remains: taxable investments and pensions are generally counted ^{[10] [2]}.

6. Limits of the sources and practical takeaway

The cited guidance and practitioner summaries consistently show that if an income item appears in AGI—or is expressly added back like tax‑exempt interest—it will affect MAGI for Marketplace and Medicaid calculations ^{[2] [1] [4]}; the available sources do not provide an exhaustive checklist of every fringe income category, so taxpayers with unusual income streams or complex trust/K‑1 items should consult the IRS instructions and Healthcare.gov or a tax professional for a program‑specific determination ^{[11] [3]}.