How to Reduce Your MAGI

One Number, Four Different Cliffs

Modified Adjusted Gross Income (MAGI) -- your Adjusted Gross Income plus a small list of addbacks like tax-exempt interest -- is one of the few numbers in the tax code that does double duty as a gatekeeper rather than a gradual input. Google autocomplete makes the real-world urgency obvious: "how to reduce magi" alone surfaces "...in retirement," "...for aca," "...for medicare," "...for irmaa," "...income," and "...for roth ira" as distinct, high-intent variants -- six separate situations, one shared number. This site has a dedicated, primary-source-verified calculator for each of the two biggest MAGI-driven cliffs households ask about, plus the two retirement-income strategies that determine how much MAGI shows up in the first place:

1. ACA Subsidy Cliff Calculator -- the hard 400% Federal Poverty Line cutoff where an entire marketplace premium tax credit disappears at once
2. Medicare IRMAA Calculator -- a six-bracket surcharge on Medicare Part B, based on MAGI from two years earlier
3. Roth Conversion Ladder Calculator -- a multi-year retirement-access strategy that deliberately ADDS to MAGI, so timing it right means filling only as much room as you have before the next cliff
4. 72(t) SEPP Calculator -- a fixed, IRS-locked withdrawal amount that becomes a mandatory MAGI floor for years at a time

The ACA Premium Tax Credit Calculator shows how big your credit is today; the guide below is about keeping it that way -- or avoiding a surprise IRMAA bracket two years from now.

The Real MAGI-Reducers: Pre-Tax Moves That Actually Lower the Number

Only pre-tax contributions and a handful of specific deductions actually shrink MAGI itself, as opposed to just changing how it's spent. For 2026, the three largest levers most households can control directly are:

Traditional 401(k)/403(b) contributions -- up to $24,500 per person, or $32,500 with the age-50+ catch-up ($35,750 for ages 60-63 under SECURE 2.0's "super catch-up"). Every pre-tax dollar contributed comes straight off AGI (and therefore MAGI) in the year it's contributed.

Traditional IRA contributions -- up to $7,500 ($8,600 age 50+), fully deductible if neither spouse is covered by a workplace plan, or subject to a phase-out ($81,000-$91,000 single / $129,000-$149,000 joint for 2026) if the contributor is covered by one.

HSA contributions -- up to $4,400 individual or $8,750 family coverage for 2026 (plus $1,000 age-55+ catch-up), the only account that's simultaneously deductible going in, tax-free growing, AND tax-free coming out for qualified medical expenses -- making it the single most MAGI-efficient dollar most households can contribute if they have an HSA-eligible high-deductible health plan.

Self-employed households have two additional levers: a SEP-IRA (up to 25% of net self-employment earnings, capped at $72,000 for 2026) and the self-employed health insurance premium deduction, both of which reduce AGI directly on Schedule 1 rather than requiring itemizing. None of these figures are estimates -- they're the same IRS Notice 2025-67 contribution limits this site's 401(k), Traditional IRA, and Roth calculators already use.

The MAGI "Budget" Strategies: Managing Timing, Not Just the Total

Two of this site's retirement calculators don't reduce MAGI at all -- they exist to help you control WHEN and HOW MUCH additional MAGI shows up, which matters just as much as reducing it:

Roth conversion ladders add to MAGI on purpose. Converting a traditional IRA/401(k) balance to a Roth is fully taxable as ordinary income in the conversion year -- the opposite of a MAGI reducer. The strategy works because early retirees often have several genuinely low-income years (after leaving a job, before Social Security or a pension starts) where they can convert enough to "fill" the lower tax brackets, or fill right up to the ACA subsidy cliff or an IRMAA bracket line, without going over it. Model the exact year-by-year conversion schedule with the Roth Conversion Ladder Calculator, then check the resulting MAGI against the ACA Subsidy Cliff Calculator or Medicare IRMAA Calculator before finalizing that year's conversion size.

A 72(t) SEPP plan is a mandatory MAGI floor, not a lever. Once a Substantially Equal Periodic Payment plan starts, IRS rules require the SAME payment amount every year for 5 years or until age 59½ (whichever is later) -- changing it early retroactively cancels the penalty exception for the entire plan. That means a SEPP payment isn't something you can shrink mid-course to duck under a threshold; it's a known, fixed amount of MAGI you have to budget the rest of your year around. Calculate your exact required payment with the 72(t) SEPP Calculator before deciding how much additional room (if any) you have left for a Roth conversion or other income in the same year.

Qualified Charitable Distributions (QCDs) are a genuine MAGI reducer -- now with its own calculator. IRA owners age 70½ or older can send funds directly from an IRA to a qualified charity, excluding that amount from gross income (and MAGI) entirely, up to a $111,000 annual IRS cap for 2026 (IRS Notice 2025-67). A QCD can satisfy all or part of that year's RMD dollar for dollar, and -- unlike an itemized charitable deduction -- it lowers AGI itself, so it works even for the majority of retirees who take the standard deduction and would get zero tax benefit from writing an equivalent personal check. Run the exact numbers with the QCD Calculator before deciding how much of an RMD to redirect.

Tax-loss harvesting is a genuine MAGI reducer too -- now with its own calculator. Realizing capital LOSSES in a taxable brokerage account offsets capital gains dollar-for-dollar and up to $3,000 of ordinary income per year ($1,500 if married filing separately, per IRC Section 1211(b)), with any excess carrying forward indefinitely -- both the offset and the carryforward reduce MAGI just like any other reduction in taxable income. Run the exact netting math, including the short-term-vs-long-term ordering rules and the wash-sale rule's 30-day repurchase window, with the Tax-Loss Harvesting Calculator.

Which Cliff Applies to You? A Decision Framework

Because the ACA cliff and IRMAA use completely different mechanics, the right first step depends on your situation:

Under 65, on an ACA marketplace plan: your MAGI this year directly determines this year's premium tax credit, with a hard cutoff at 400% of the Federal Poverty Line -- there's no gradual phase-out, so even $1 over the line eliminates the entire credit. Run the ACA Subsidy Cliff Calculator BEFORE year-end to see exactly how much MAGI-reducing room (via a 401(k) or traditional IRA contribution) you'd need to stay under it.

Age 63-64, or already on Medicare: IRMAA looks back two full tax years, so a big Roth conversion or unusually high income at 63 raises your Medicare Part B premium starting at 65. Unlike ordinary income tax brackets, IRMAA is NOT marginal -- crossing into a higher of the six MAGI brackets adds that bracket's entire fixed monthly surcharge to your premium for the whole year, not just on the income above the threshold, so it behaves more like a series of smaller cliffs than a smooth phase-in. Check the Medicare IRMAA Calculator using your income from two years before the premium year you're planning for.

Retiring early and need access to retirement funds before 59½: this is a MAGI-ADDING decision, not a reducing one -- compare the Roth Conversion Ladder Calculator (flexible amount, but needs a 5-year bridge fund) against the 72(t) SEPP Calculator (immediate access, but a rigid, unchangeable payment) to see which fits your bridge-fund savings and your ACA/IRMAA MAGI room better.

Every filer, every year: maxing out a traditional 401(k), HSA, and (if eligible) a deductible traditional IRA contribution is the most reliable way to lower MAGI across ALL of the above thresholds simultaneously, since it's the one move that isn't specific to any single cliff.