Start here
The basics
MAGI is not one universal number. Tax law starts with adjusted gross income and adds or removes specified items for a particular test. Medicare IRMAA, IRA contribution rules, and NIIT can therefore use related but not always identical definitions.
Illustrative numbers
One gain, several consequences
Ordinary modeled income$180,000
Realized long-term gain$50,000
Approximate modeled MAGI$230,000
The gain is still a capital gain for its own rate ladder, but it also enters the MAGI used for NIIT and the later IRMAA lookback.
Calculation transparency
How it works in MoneyWhatIf
- 01
The annual engine recomputes a settled income view after withdrawals and sales, rather than freezing MAGI before the year is funded.
- 02
For IRMAA, the model retains the household result and reads it two years later. For IRA phaseouts, it evaluates the applicable contribution-year range.
- 03
Capital gains keep their gains-rate treatment even when they also increase a MAGI-based threshold test.
Keep in mind
Model limits
The projection uses a planning approximation, not every Form 1040 adjustment or every program’s statutory MAGI worksheet.
Items the plan does not collect—such as foreign earned-income exclusions—cannot be added back. Tax-exempt interest from a municipal bond holding is collected, and is added back for IRMAA and for marketplace eligibility.
Use a tax professional or the program’s official worksheet when a precise eligibility or premium decision depends on MAGI.
This explanation documents the planning model. It is educational, not individualized tax, legal, Medicare, or investment advice.
Where it appears
Where to use it
See this concept in context, with a guide to each page and its controls.
The words behind it
Related financial terms
Plain-English definitions, with 2026 figures and worked examples, from the financial terms glossary.