What income counts as household modified adjusted gross income (MAGI) for 2025 ACA premium tax credits?

1. How the government defines MAGI for Marketplace subsidies

The Marketplace definition is explicit: start with AGI (the number on Form 1040) and add untaxed foreign income, Social Security benefits not included in gross income, and tax‑exempt interest to reach the modified adjusted gross income that determines premium tax credit eligibility ^{[1] [2]}. HealthCare.gov and the Marketplace use this MAGI number to decide who qualifies for premium tax credits, Medicaid, and CHIP ^[1].

2. What counts as “income” on the 1040 (and what often doesn’t)

AGI itself is your gross income for the year minus allowable adjustments such as certain retirement or student loan deductions; it appears on line 11 of the 2025 Form 1040 and is the usual starting point for MAGI ^{[1] [4]}. Pre‑tax employer deductions—like employer‑sponsored health premiums, 401(k) deferrals, or flexible spending accounts—are already excluded from wages and therefore typically don’t count toward MAGI ^[3].

3. Three add‑backs that can raise your MAGI

If you have any of the following, they are added to AGI to produce ACA MAGI: untaxed foreign income, non‑taxable Social Security benefits (including some SSDI but excluding SSI), and tax‑exempt interest ^{[2] [1] [5]}. These are the specific “modifications” Congress wrote into the ACA‑Marketplace MAGI methodology ^[1].

4. Practical consequences for subsidy calculations

Because MAGI is the basis for premium tax credits, small changes that affect AGI or those three add‑backs can change subsidy size. For many households MAGI and AGI are the same or nearly so, which means ordinary tax withholding and deductions often determine subsidy eligibility ^[1]. Analysts and consumer guides note that actions that lower AGI (or avoid those add‑backs) can increase subsidies; conversely, higher MAGI reduces them ^{[6] [7]}.

5. Differences and nuances across programs and special cases

Although Marketplace premium credits and most Medicaid determinations use the same MAGI definition, program rules differ in how income timing and lump sums are treated: the Marketplace counts annual income for subsidy eligibility while Medicaid may count certain lump sums only in the month received; some American Indian and Alaska Native income is excluded from Medicaid MAGI calculations ^[3]. The ACA’s MAGI also differs from MAGI definitions used for other federal rules (e.g., Medicare IRMAA or IRA phase‑outs) so an MAGI figure for one program isn’t always interchangeable with another ^{[7] [8]}.

6. Where people commonly get tripped up

Common confusion arises because MAGI does not appear as a line on your tax return; you must compute it by starting with AGI and adding the three categories described above ^[1]. People also mistakenly assume employer pre‑tax deductions or certain welfare payments (like SSI) count toward MAGI—those are not included under the Marketplace definition ^{[3] [2]}.

7. What the available reporting doesn’t address here

Available sources in the provided set do not mention whether any 2025 legislative changes (beyond the existing ACA rules) altered the three specific MAGI add‑backs or changed the way lump sums over the 2025 plan year are treated for Marketplace subsidies; the cited guidance describes the longstanding ACA Marketplace MAGI methodology ^{[1] [3]}. For individualized answers—especially for complex situations such as large lump‑sum income, foreign income nuances, or interactions with self‑employment deductions—consult the Marketplace, your state Medicaid office, or a tax professional ^[5].

8. Bottom line for 2025 consumers shopping for coverage

When estimating 2025 premium tax credit eligibility, use your 2025 AGI projection as the baseline and remember to add any untaxed foreign income, tax‑exempt interest, and non‑taxable Social Security benefits to arrive at ACA MAGI; for most people this will equal or closely match AGI, but the three specified add‑backs can make the difference between qualifying for larger subsidies or not ^{[1] [2]}.