What Is MAGI? How Medicaid Counts Your Income in 2026
Most Medicaid eligibility decisions for adults, children, parents and pregnant women come down to one number: Modified Adjusted Gross Income (MAGI). It is a tax-based definition of income that every state has used since 2014. If you understand how MAGI is built, you can predict your own eligibility before you apply.
Where does MAGI come from?
MAGI starts with the adjusted gross income on a federal tax return, then adds back three items: non-taxable Social Security benefits, tax-exempt interest, and foreign earned income that was excluded. For most households MAGI is simply total gross income minus a handful of "above-the-line" deductions such as traditional IRA contributions, student loan interest and half of self-employment tax.
What counts as income
- Wages and salary before taxes
- Net profit from self-employment or gig work
- Social Security retirement, survivor and disability (SSDI) benefits, including the non-taxable portion
- Unemployment compensation
- Pensions, annuities and taxable retirement withdrawals
- Rental income, capital gains, interest and dividends
- Alimony from agreements finalized before 2019
What does not count
- Supplemental Security Income (SSI)
- Child support you receive
- Veterans' disability compensation and most VA benefits
- Workers' compensation
- Gifts, inheritances and loans
- Federal tax refunds and the Earned Income Credit
- Scholarships used for tuition
Why is the adult limit 138% and not 133%?
The Affordable Care Act set the expansion limit at 133% of the federal poverty level, but the law also requires states to subtract 5% of the poverty level from everyone's income before comparing it to the limit. The practical result is a 138% cutoff. The same 5% disregard applies to children and pregnant women, which is why state limits are often quoted as odd numbers like 213% or 266%.
Monthly or annual?
States look at your current monthly income when you apply and at annual income only if it gives a different result that helps you. If your hours just got cut, use what you earn now, not what you earned last year.
Whose income is counted?
Medicaid builds a household the way the IRS does: you, your spouse if you file jointly, and anyone you claim as a dependent. A parent's income counts for a child; a roommate's income never does. A pregnant woman's household includes the expected child.
What to do next
- Add up gross monthly income for everyone in your tax household.
- Compare it to your state's limit on the state page, or use the eligibility calculator.
- If you are within about 5% of the limit, apply anyway; the disregard may put you under.
- Keep recent pay stubs; the state may ask for them to verify.