What counts as MAGI for the ACA
ACA MAGI is your adjusted gross income (Form 1040, line 11) plus:
- Tax-exempt interest (for example, municipal bond interest)
- Non-taxable Social Security benefits
- Foreign earned income and housing costs excluded under §911
It includes the income of everyone in your tax household who is required to file a return.
1. Pre-tax 401(k), 403(b) or 457(b) contributions
The biggest lever for employees. Limit: $24,500 for 2026, plus $8,000 catch-up at age 50+ (higher at ages 60–63). Contributions must be traditional, not Roth, and go through payroll by December 31.
2. Health Savings Account (HSA)
If you enroll in an HSA-eligible bronze or high-deductible plan, contributions are deducted from income. Limits: $4,400 self / $8,750 family for 2026, and $4,500 / $9,000 for 2027, plus $1,000 at age 55+.
3. Traditional IRA
Up to $7,500 per person for 2026 ($8,600 at age 50+). Deductibility phases out if you or your spouse are covered by a workplace plan and your income is above certain limits, so check before relying on it.
4. Self-employed retirement plans
A SEP-IRA lets you contribute up to 25% of net self-employment earnings. A solo 401(k) adds an employee deferral on top. For freelancers and early retirees with consulting income, these are often the fastest way under the cliff.
5. Time your capital gains and Roth conversions
Capital gains, Roth conversions and traditional IRA withdrawals all add to MAGI. If you are close to the line, consider spreading them across years, harvesting losses to offset gains, or doing conversions in a year you are not on marketplace coverage.
6. Self-employed deductions
Business expenses, half of self-employment tax and the self-employed health insurance deduction all reduce AGI. Keep good records.
Check your numbers
Use the 2027 cliff calculator to see exactly how much you need to cut, or the 2026 repayment calculator if you already received advance credits.