Modified Adjusted Gross Income (MAGI)

A specific calculation of an individual’s income that determines eligibility for tax-deductible IRA contributions. First, Adjusted Gross Income is calculated as one’s gross income (salaries, wages, interest income, dividends, capital gains, etc.) less┬átax-deductible expenditures (student loan interest, health insurance, etc.). Then, some sources of income which had been excluded from Gross Income (N/A for the average taxpayer) are added back in to arrive at the MAGI.