Which types of income are excluded or counted under MAGI for 2026 eligibility determinations?
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Executive summary
For most 2026 federal programs that use MAGI, Modified Adjusted Gross Income starts with your AGI and typically adds back tax‑exempt interest and certain exclusions such as the Foreign Earned Income Exclusion — meaning many untaxed items can still raise MAGI (examples of add‑backs noted in reporting: tax‑exempt interest and excluded foreign income) [1][2]. Different programs use MAGI differently: the Social Security Administration (for IRMAA) defines MAGI as “line 11 plus line 2a” on Form 1040 — effectively AGI plus tax‑exempt interest — and uses the MAGI from two years earlier to set 2026 surcharges [3][4].
1. What “MAGI” generally means in 2026: a short definition
Federal guidance and reporting show MAGI is not a single universal formula but usually equals your adjusted gross income (AGI) with specific add‑backs; for Medicare IRMAA purposes the SSA uses AGI plus tax‑exempt interest (line 11 + line 2a on Form 1040) as the operative MAGI [3][4]. Health‑marketplace/MAGI rules are tied to CMS definitions and can differ from IRS uses — reporting notes the ACA’s MAGI rules are specific to the marketplace and not identical to other MAGI calculations [5].
2. Income items commonly counted toward MAGI
Coverage of IRMAA and MAGI calculations lists wages, pensions, traditional IRA withdrawals, capital gains and rental income as contributors to AGI and therefore to MAGI; those sources will raise your MAGI and can trigger higher Medicare surcharges or change eligibility for Roth contributions or subsidies [1][6]. Practically, for IRMAA the SSA applies the MAGI reported on your tax return (e.g., 2024 MAGI to set 2026 IRMAA), so realized capital gains and retirement distributions reported on that return count [1][7].
3. Income items specifically added back or treated as MAGI in many rules
Sources call out tax‑exempt interest as an explicit add‑back to AGI when computing MAGI for programs like IRMAA (SSA wording: line 11 plus line 2a) [4][1]. Excluded foreign earned income that lowered AGI on the tax return may be added back in MAGI calculations used by some programs or benefits for expatriates and certain deductions — taxes‑for‑expats reporting highlights the Foreign Earned Income Exclusion is added back when calculating MAGI for some eligibility tests [2].
4. Income items often excluded or treated differently
Reporting indicates Supplemental Security Income (SSI) is excluded from MAGI and “won’t affect your eligibility for MAGI‑based deductions” in the contexts discussed by expat/tax guidance [2]. Beyond that, sources note differences exist between program rules (ACA vs. Medicare vs. IRA rules) and that some items (e.g., Roth distributions, gifts, certain exclusions) may be “MAGI‑safe” in some contexts — but those specifics vary by program and aren’t exhaustively listed in the available reporting [1][5].
5. Program differences matter — IRMAA, marketplace subsidies, retirement accounts
Medicare: IRMAA for 2026 is determined from your 2024 MAGI on your tax return; SSA uses AGI plus tax‑exempt interest and applies surcharges if you exceed thresholds (reporting cites the two‑year lookback and line references) [4][7]. Marketplace/ACA: MAGI for premium tax credits follows CMS rules that differ from SSA’s; healthinsurance.org warns the ACA’s MAGI is specific to the marketplace and reconciles advance payments against actual MAGI [5]. Retirement accounts/Roth eligibility: Roth IRA contribution phase‑outs for 2026 are keyed to MAGI ranges (e.g., full Roth contribution under $153,000 for single filers in 2026), and Fidelity explains how MAGI determines Roth eligibility [6].
6. Practical takeaways and where reporting diverges
If your objective is to lower exposure to 2026 IRMAA surcharges or to qualify for Roth/marketplace benefits, focus on the MAGI reported on the relevant tax year (IRMAA uses 2024 MAGI for 2026) and remember tax‑exempt interest and some excluded foreign income can be added back [4][1][2]. Sources converge on the role of AGI as the base and tax‑exempt interest as a frequent add‑back, but they diverge on other items and on program specifics — healthinsurance.org explicitly flags that ACA MAGI rules are different from other MAGI uses [5].
Limitations and next steps
Available sources do not present a single, exhaustive list of every income type added to or excluded from MAGI across all federal programs; each program’s definition matters [5]. For a definitive, itemized determination for your situation, consult the IRS/SSA/CMS guidance that applies to the benefit you care about or a tax adviser — the SSA form and guidance are the clearest operational rule for Medicare IRMAA (line 11 + line 2a) [4].