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Free tool · the number the marketplace actually usesMAGI Calculator for ACA Subsidies (2026): What Income to Report to the Marketplace, Especially If You Are Self-Employed
By Dick Tracy · Published August 29, 2026
Does Obamacare use gross or adjusted income? Adjusted, with a few add-backs. The marketplace subsidy is based on modified adjusted gross income: line 11 of your Form 1040, plus untaxed Social Security, tax-exempt interest, and excluded foreign income, for everyone on your return. It is not gross receipts, not your salary before deductions, and not what you pay yourself. Self-employed people get this wrong more than anyone, and for 2026 a wrong number means repaying the subsidy with no cap. This free calculator turns your real inputs into the one number to put on the application, then shows you where it lands against the 2026 cliff. No email, no signup. I educate, you decide.
1. Your household
2. Your business (if self-employed)
Sole proprietor, single-member LLC, 1099 contractor, gig work. Leave blank if you have no business income.
3. Everyone else's income, and your other income
Estimated 2026 household MAGI: the number to put on the marketplace application
Estimates only. Half of self-employment tax is approximated as 7.65% of net profit times 0.9235 (the IRS formula, ignoring the Social Security wage base). Untaxed Social Security is estimated at 15% of benefits, the minimum for most marketplace-income households; your actual split depends on total income. Cliff lines are 400% of the 2025 federal poverty guidelines for the lower 48 states and DC. This is education, not tax advice. Run the real numbers with your tax professional, then bring me the result.
MAGI for the ACA, in one table
| Start with (adds up to line 11) | Minus (Schedule 1 adjustments) | Then add back (the "modified" part) |
|---|---|---|
| Wages (W-2 Box 1) Self-employment net profit Interest, dividends, capital gains Rental profit Pensions, traditional IRA/401(k) withdrawals, Roth conversions Unemployment Taxable Social Security Alimony received (pre-2019 agreements) A dependent's income if they must file |
Half of self-employment tax SEP-IRA / SIMPLE / Solo 401(k) contributions Self-employed health insurance deduction Deductible traditional IRA contributions HSA contributions Student loan interest Alimony paid (pre-2019 agreements) |
Untaxed Social Security Tax-exempt municipal bond interest Foreign earned income you excluded |
Not on the list anywhere: gifts, inheritances, child support, SSI, workers' compensation, VA disability, qualified Roth withdrawals, life insurance proceeds, and the standard or itemized deduction (those come after line 11 and do not matter here).
The self-employed mistake, with numbers
A Buffalo contractor grosses $140,000, spends $45,000 running the business, and pays herself $70,000. Three different people would type three different numbers into the marketplace: $140,000, $70,000, or $95,000. Only one is right, and it is none of the obvious two. Net profit is $95,000. Subtract roughly $6,700 for half of self-employment tax and a $12,000 SEP contribution and her MAGI is about $76,300. For a household of two, the 2026 cliff is $84,600. At $140,000 she thinks she gets nothing and pays full price. At $70,000 she gets a bigger subsidy than she is entitled to and repays the difference in April with no cap. At $76,300 she gets exactly what she qualifies for, and she knows she has $8,300 of cushion. That is the whole point of this page.
What to do with your number
Put the MAGI figure on the application, not the gross and not the draw. Then run the 8 knockout questions, because income is only half the eligibility test; a spouse's job plan or a filing-status answer can wipe out the subsidy no matter what this number says. If you are close to the cliff, decide now what you will do with a strong fourth quarter; a Solo 401(k) contribution is the usual lever. If you are over it, the marketplace is not where your price advantage lives, and I will show you the doors that are not income-tested: in New York, pre-established ERISA group plans; elsewhere, private plans priced on you. Either way, report income changes to the marketplace the month they happen, not at renewal.
Common questions about MAGI and the marketplace
How is MAGI calculated for ACA subsidies?
Adjusted gross income from line 11 of Form 1040, plus three add-backs: tax-exempt interest, the untaxed portion of Social Security, and excluded foreign earned income. AGI already includes wages, self-employment net profit, interest, dividends, capital gains, retirement withdrawals, unemployment, and rental income, minus Schedule 1 adjustments such as half of self-employment tax, SEP or Solo 401(k) contributions, the self-employed health insurance deduction, deductible IRA contributions, HSA contributions, and student loan interest. It is measured for everyone on your return, including a dependent who earns enough to be required to file.
Does Obamacare use gross or adjusted income?
Adjusted, with a few things added back. The marketplace does not use gross receipts, gross pay, or take-home pay. It uses modified adjusted gross income: line 11 of your 1040 plus untaxed Social Security, tax-exempt interest, and excluded foreign income. For a W-2 employee that is usually close to Box 1 of the W-2. For a self-employed person it is net profit after business deductions, minus half of self-employment tax and any retirement or health insurance deductions.
What income does a self-employed person report to the marketplace?
Net profit, not what you pay yourself and not gross receipts. Take what came in, subtract every legitimate business expense, and that is your Schedule C net profit. Then subtract half of self-employment tax, SEP-IRA or Solo 401(k) contributions, and the self-employed health insurance deduction. Add the rest of the household's income. That total goes on the application. Entering your draw is the most common self-employed subsidy mistake, and for 2026 it lands as an uncapped repayment.
Is healthcare.gov income gross or net?
Net, in the sense of adjusted gross income. The application asks for expected household income for the coverage year, and the definition it uses is modified adjusted gross income. For employees, roughly the taxable wages on your W-2. For the self-employed, net profit after expenses. Then it adds back untaxed Social Security and tax-exempt interest. It is not take-home pay and it is not what the business deposited.
What counts as income for Obamacare?
Wages and tips, self-employment net profit, taxable interest and dividends, capital gains, rental profit, pensions, traditional IRA and 401(k) withdrawals, Roth conversions, unemployment, alimony from pre-2019 agreements, plus untaxed Social Security, tax-exempt interest, and excluded foreign income. It does not count gifts, inheritances, child support, SSI, workers' compensation, VA disability, qualified Roth withdrawals, or life insurance proceeds.
Why does the self-employed health insurance deduction make the math circular?
Because the deduction lowers your MAGI, which raises your subsidy, which lowers the premium you actually paid, which lowers the deduction. The IRS solved this in Revenue Procedure 2014-41 with an iterative method that tax software runs automatically. You only deduct the part of the premium you paid after the credit. For planning, estimate the deduction as your net out-of-pocket premium, get the other inputs right, and let the software finish it at filing.
Bring me last year's Schedule C and this year's best guess. I will walk the math with you, tell you your cushion, and show you what the marketplace, a pre-established ERISA group plan, and a private plan each cost at that number. Free, no hard sell. I educate, you decide.
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