MAGI, explained: the income number that decides your subsidy

Published 2026-07-03 · Updated July 2026

The cliff isn’t measured against your salary or your gross — it’s MAGI: adjusted gross income plus tax-exempt interest, the non-taxable part of Social Security, and any excluded foreign income.

Key takeaway

MAGI is not the number on your pay stub. It starts with AGI and adds back a few items most people never think about — tax-exempt muni-bond interest and the non-taxable share of Social Security chief among them. Anyone drawing Social Security early or holding municipal bonds should recompute, not estimate.

Why it matters: the levers that lower MAGI — retirement contributions, HSA contributions, timing of gains and withdrawals — are exactly the moves that can pull you back under 400%. See the strategies.