To reduce MAGI, use above-the-line moves that lower adjusted gross income: HSA contributions, pre-tax 401(k) and IRA deferrals, capital-loss harvesting, and a qualified charitable distribution of up to $111,000 per person in 2026.
Key Takeaways
- The 2026 qualified charitable distribution limit is $111,000 per person, up from $108,000 in 2025, and is available at age 70 and a half or older (IRS Notice 2025-67).
- For 2026 the HSA contribution limit is $4,400 self-only and $8,750 family, with a $1,000 catch-up at age 55 and older.
- The 2026 401(k) elective deferral limit is $24,500, and the traditional IRA limit is $7,500 ($8,600 at age 50 and older).
- The standard deduction ($16,100 single, $32,200 married filing jointly for 2026) is subtracted after AGI, so it does not reduce MAGI.
- Medicare IRMAA surcharges begin above $109,000 MAGI single or $218,000 married filing jointly for 2026, using the return from two years prior.
- Capital-loss harvesting can deduct up to $3,000 of excess loss against ordinary income each year ($1,500 if married filing separately), with the remainder carried forward.
- The Net Investment Income Tax threshold is $200,000 single or $250,000 married filing jointly, and it is statutory rather than indexed.
MAGI Levers: 2026 Figures
Figures reflect 2026 amounts cited in this article, and each program defines MAGI differently.
Reducing MAGI (modified adjusted gross income) comes down to a short set of legal levers that lower adjusted gross income or the income flowing into it: qualified charitable distributions, health savings account contributions, pre-tax retirement deferrals, capital-loss harvesting, and careful timing of income events such as Roth conversions. MAGI is not one number, and each program defines it differently, so a lever that helps one threshold may not touch another.
The main ways to reduce MAGI are AGI-lowering moves that work for every program: HSA contributions, pre-tax 401(k) and IRA deferrals, capital-loss harvesting, and a qualified charitable distribution (up to $111,000 per person in 2026) that satisfies a required minimum distribution while staying out of AGI. Timing income across tax years, including Roth conversions, controls which year MAGI spikes (Source: IRS Notice 2025-67).
What is MAGI and why does lowering it matter?
MAGI, or modified adjusted gross income, is your adjusted gross income (AGI) plus specific items added back, and it serves as the eligibility test for several tax and benefit programs. Because each program starts from AGI and adds different items, there is no single MAGI figure that applies everywhere, and lowering it matters because crossing a threshold can raise costs or cut benefits (Source: IRS Pub 974, 2025).
People search for ways to reduce MAGI mainly to stay under a Medicare IRMAA bracket, keep an ACA premium tax credit, avoid the 3.8% Net Investment Income Tax, or preserve Roth IRA contribution eligibility. Lowering AGI is a direct approach, because AGI feeds every MAGI calculation before any add-backs, and because some programs use a cliff structure, precise year-by-year management can matter more than the size of any one deduction (Source: SSA POMS HI 01101.020, rev. 12/02/2025).
Does the standard deduction reduce MAGI?
No, the standard deduction does not reduce MAGI. The 2026 standard deduction ($16,100 single, $32,200 married filing jointly) is subtracted after AGI to reach taxable income, so it lowers tax owed but leaves AGI, and every MAGI figure, unchanged. Only above-the-line adjustments, such as HSA or deductible IRA contributions, reduce AGI and MAGI (Source: IRS Rev. Proc. 2025-32).
On Form 1040, AGI is calculated first, after above-the-line adjustments; the standard deduction (or itemized deductions) comes next, converting AGI into taxable income. Because MAGI is built from AGI, anything applied after the AGI line, including the standard deduction and the OBBBA senior deduction ($6,000 per person age 65 and older for 2025 to 2028), leaves MAGI unchanged.
MAGI-reduction therefore has to happen above the AGI line. Deductible retirement and HSA contributions, self-employed health-insurance premiums, and student-loan interest all lower AGI and MAGI; the below-the-line standard deduction does not.
Which programs use MAGI as a threshold in 2026?
Four systems use MAGI as a threshold in 2026, and each defines it differently, so a strategy should be matched to the program it targets. The table summarizes the 2026 rules for Medicare IRMAA, ACA premium tax credits, the Net Investment Income Tax (NIIT), and Roth IRA contribution eligibility.
| Program | How MAGI is defined | 2026 threshold detail |
|---|---|---|
| Medicare IRMAA (Part B/D surcharge) | AGI plus tax-exempt interest, using the return from 2 years prior | Surcharge begins above $109,000 single / $218,000 MFJ (Source: SSA POMS HI 01101.020) |
| ACA Premium Tax Credit | AGI plus tax-exempt interest, excluded foreign income, and nontaxable Social Security | Household income tested against the federal poverty line (Source: IRS Premium Tax Credit eligibility, 2025) |
| Net Investment Income Tax (NIIT) | AGI plus excluded foreign earned income (net of related deductions) | Statutory, not indexed: $200,000 single / $250,000 MFJ / $125,000 MFS (Source: IRC section 1411(b)) |
| Roth IRA contribution eligibility | A modified AGI defined in the Roth rules | Phase-out $153,000 to $168,000 single; $242,000 to $252,000 MFJ (Source: IRS Notice 2025-67) |
A lever that lowers AGI (such as an HSA contribution) helps all four, while a lever that only removes an item already outside a particular MAGI definition may not. Matching the tactic to the target program is the theme of the sections below.
How do I reduce MAGI for Medicare IRMAA?
To reduce MAGI for Medicare IRMAA, lower the AGI on the return filed two years before the premium year, because 2026 surcharges rest on your 2024 return. Above-the-line moves (HSA and pre-tax deferrals) and a qualified charitable distribution that keeps RMD income out of AGI are the usual levers. Staying at or below $109,000 single or $218,000 MFJ for 2026 keeps a household under the first surcharge tier (Source: SSA POMS HI 01101.020).
IRMAA is a high-income surcharge on Medicare Part B and Part D premiums, using MAGI (AGI plus tax-exempt interest) from the return filed two years earlier. The standard 2026 Part B premium is $202.90 per month; above the thresholds, both a higher premium and a Part D add-on apply, as shown below.
| 2026 MAGI (single / MFJ) | Total Part B premium | Part D add-on |
|---|---|---|
| At/below $109,000 / $218,000 | $202.90 (standard) | $0 |
| $109,001 to $137,000 / $218,001 to $274,000 | $284.10 | +$14.50 |
| $137,001 to $171,000 / $274,001 to $342,000 | $405.80 | +$37.50 |
| $171,001 to $205,000 / $342,001 to $410,000 | $527.50 | +$60.40 |
| $205,001 to $499,999 / $410,001 to $749,999 | $649.20 | +$83.30 |
| $500,000 and above / $750,000 and above | $689.90 | +$91.00 |
The two-year lookback creates a planning window most people miss: a large income event at age 63 can raise the premium at age 65, and the last conversion year that does not affect any Part B premium is age 62 (Source: SSA POMS HI 01101.020, rev. 12/02/2025).
How does a qualified charitable distribution reduce MAGI?
A qualified charitable distribution (QCD) reduces MAGI because it lets a person age 70½ or older send IRA money directly to a charity, and that amount is excluded from gross income entirely. Because the distribution never enters AGI, a QCD lowers MAGI for every program at once and can also satisfy a required minimum distribution. The 2026 limit is $111,000 per person (Source: IRS Notice 2025-67; Pub 590-B).
A QCD is available only from an IRA, not directly from a 401(k), and each spouse on a joint return has a separate $111,000 limit for 2026, up from $108,000 in 2025 (Source: IRS Notice 2025-67). For retirees whose RMDs would otherwise push MAGI over an IRMAA or NIIT line, routing the RMD through a QCD keeps that income out of AGI. Our required minimum distributions 2026 guide shows how RMDs interact with these limits.
Why a cash donation does NOT reduce MAGI
An ordinary cash gift to charity does not reduce MAGI. A cash donation is an itemized deduction subtracted after AGI to reach taxable income, so it lowers tax owed but leaves AGI and MAGI unchanged (Source: IRS Pub 526, 2025). A QCD is different: it excludes the money from gross income before AGI, so the same dollar given as a QCD lowers MAGI while a check does not.
How do HSA and pre-tax retirement contributions lower MAGI?
HSA and pre-tax retirement contributions lower MAGI because they are above-the-line adjustments that reduce AGI directly, and every version of MAGI is built from AGI. For 2026 the HSA limit is $4,400 self-only and $8,750 family, the 401(k) elective deferral limit is $24,500, and the traditional IRA limit is $7,500 ($8,600 at age 50 and older) (Source: IRS Rev. Proc. 2025-19; Notice 2025-67).
An HSA requires a high-deductible health plan, and only a deductible traditional IRA contribution (not a Roth contribution) lowers AGI. A $1,000 HSA catch-up applies at age 55 and older, and 401(k) catch-up amounts reach $8,000 at age 50 and $11,250 for ages 60 to 63 (Source: IRS Rev. Proc. 2025-19; Notice 2025-67). Because each sits above the AGI line, the reduction flows through to IRMAA, the ACA credit, NIIT, and Roth eligibility alike.
Can capital-loss harvesting reduce MAGI?
Yes, capital-loss harvesting can reduce MAGI by realizing investment losses that offset realized gains, which lowers net capital gain inside AGI. Net losses first offset gains, then up to $3,000 of excess loss ($1,500 if married filing separately) can be deducted against ordinary income each year, and any remainder carries forward indefinitely (Source: IRS Topic no. 409; Schedule D instructions, 2025).
Because reducing net investment income also affects the Net Investment Income Tax, harvesting losses can influence two figures at once: the AGI that feeds MAGI, and the investment-income base the 3.8% tax is applied to. Harvesting is subject to the wash-sale rule, which disallows a loss if a substantially identical security is bought within 30 days before or after the sale (Source: IRS Pub 550, 2025). Our Net Investment Income Tax (NIIT) 2026 guide covers that interaction in detail.
Do Roth conversions increase or reduce MAGI?
A Roth conversion increases MAGI in the conversion year, because it is a taxable distribution included in gross income, AGI, and MAGI (Source: IRS Pub 590-A, 2025). It does not reduce current MAGI. Its benefit is later: by shrinking the pre-tax IRA balance, a conversion cuts future required minimum distributions, which lowers the RMD-driven MAGI that would otherwise raise IRMAA and NIIT exposure in retirement. Workplace deferrals work differently, as explained in whether MAGI includes 401(k) contributions.
The higher MAGI a conversion produces can push a household into a higher IRMAA bracket, over an ACA credit cliff, over a NIIT threshold, or past the Roth contribution phase-out. The converted amount is not net investment income, but the higher MAGI can subject other investment income to the 3.8% NIIT (Source: Form 8960 instructions, 2025). A conversion is uncapped, irreversible, must be completed by December 31, and an RMD cannot itself be converted.
The tension is that a Roth conversion raises MAGI now to lower it later, so many plans weigh a low-income year’s bracket and IRMAA headroom before deciding an amount; qualified Roth withdrawals do not count in MAGI at all. Our how much to convert to Roth guide shows how these effects can play out. This is general information, not a recommendation.
Which MAGI-reduction strategy fits which program?
The value of a given lever depends on which threshold a household is trying to stay under, and each program defines MAGI differently. The table maps the common MAGI-reduction levers to the programs they can influence in 2026.
| Lever | How it works | Programs it can affect |
|---|---|---|
| Qualified charitable distribution | Excludes up to $111,000 (2026) from AGI while meeting RMDs; IRA only, age 70½+ | IRMAA, ACA PTC, NIIT, Roth eligibility |
| HSA / pre-tax deferrals | Above-the-line adjustments that lower AGI directly | IRMAA, ACA PTC, NIIT, Roth eligibility |
| Capital-loss harvesting | Offsets gains; up to $3,000/yr against ordinary income | IRMAA, ACA PTC, NIIT, Roth eligibility |
| Above-the-line deductions (student-loan interest, SE health insurance) | Reduce AGI before any MAGI add-back | IRMAA, ACA PTC, NIIT, Roth eligibility |
| Roth conversion timing | Raises MAGI in the conversion year; cuts future RMD-driven MAGI | Managed to avoid crossing thresholds in a given year |
| Standard deduction | Below-the-line; reduces taxable income, not AGI or MAGI | None (does not reduce MAGI) |
AGI-reducing levers help every program, while income-timing levers such as conversions are managed around thresholds. Which approach fits depends on a household’s income sources, age, and the line it is closest to.
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Frequently asked questions
How can I reduce my MAGI?
You can reduce MAGI by lowering AGI or the income that flows into it: HSA contributions ($4,400 self-only / $8,750 family in 2026), pre-tax 401(k) and deductible IRA contributions, capital-loss harvesting, and a qualified charitable distribution of up to $111,000 that keeps RMD income out of AGI. Timing income across tax years controls which year MAGI spikes (Source: IRS Notice 2025-67).
What is the difference between AGI and MAGI?
AGI is adjusted gross income, the figure on Form 1040 after above-the-line adjustments. MAGI is AGI plus certain items added back, and each program adds back different items. Medicare IRMAA adds tax-exempt interest, while the ACA credit also adds excluded foreign income and nontaxable Social Security (Source: IRS Pub 974, 2025).
Does the standard deduction reduce MAGI?
No. The standard deduction ($16,100 single / $32,200 MFJ for 2026) is subtracted after AGI to reach taxable income, so it lowers tax owed but not AGI or MAGI. Only above-the-line items, such as HSA contributions, deductible IRA contributions, and student-loan interest, reduce AGI and therefore MAGI (Source: IRS Rev. Proc. 2025-32; Pub 974).
Do Roth conversions count toward MAGI?
Yes. A Roth conversion is a taxable distribution included in gross income, so it raises AGI and MAGI in the conversion year (Source: IRS Pub 590-A, 2025). The converted amount is not net investment income itself, but the higher MAGI can subject other investment income to the 3.8% NIIT and can affect IRMAA two years later.
What income is included in MAGI?
MAGI starts with AGI, which includes wages, interest, dividends, capital gains, taxable pensions, IRA and 401(k) distributions, and the taxable part of Social Security. Each program then adds back specific items: IRMAA adds tax-exempt interest, and the ACA credit adds nontaxable Social Security and excluded foreign income (Source: IRS Pub 974, 2025). Qualified Roth withdrawals are not included.
How do I lower my MAGI for IRMAA?
Lower the AGI on the return filed two years before the premium year, since 2026 IRMAA rests on the 2024 return. Above-the-line moves and a qualified charitable distribution that keeps RMD income out of AGI are the usual levers. Because IRMAA is a cliff, staying at or below $109,000 single or $218,000 MFJ for 2026 keeps a household under the first surcharge tier (Source: SSA POMS HI 01101.020, rev. 12/02/2025).
Does charitable giving reduce MAGI?
Only a qualified charitable distribution does. A QCD from an IRA excludes the gift from gross income, so it never enters AGI or MAGI, and it is available at age 70½ or older with a 2026 limit of $111,000 per person. An ordinary cash donation is an itemized deduction that reduces taxable income but not AGI or MAGI (Source: IRS Pub 590-B; Pub 526, 2025).
Sources
SSA POMS HI 01101.020 (rev. 12/02/2025), https://secure.ssa.gov/poms.nsf/lnx/0601101020 · CMS, 2026 Medicare Parts A & B Premiums and Deductibles fact sheet, https://www.cms.gov/newsroom/fact-sheets/2026-medicare-parts-b-premiums-deductibles · IRS, Eligibility for the Premium Tax Credit, https://www.irs.gov/affordable-care-act/individuals-and-families/eligibility-for-the-premium-tax-credit · IRS Pub 974, https://www.irs.gov/pub/irs-pdf/p974.pdf · IRC section 1411(b), https://www.law.cornell.edu/uscode/text/26/1411 · IRS Form 8960 instructions, https://www.irs.gov/instructions/i8960 · IRS Notice 2025-67, https://www.irs.gov/pub/irs-drop/n-25-67.pdf · IRS Rev. Proc. 2025-32, https://www.irs.gov/pub/irs-drop/rp-25-32.pdf · IRS Rev. Proc. 2025-19, https://www.irs.gov/pub/irs-drop/rp-25-19.pdf · IRS Topic no. 409, https://www.irs.gov/taxtopics/tc409 · IRS Schedule D (Form 1040) instructions, https://www.irs.gov/instructions/i1040sd · IRS Pub 550, https://www.irs.gov/publications/p550 · IRS Pub 526, https://www.irs.gov/publications/p526 · IRS Pub 590-A, https://www.irs.gov/publications/p590a · IRS Pub 590-B, https://www.irs.gov/publications/p590b
