Your 2027 health insurance subsidy is based on Modified Adjusted Gross Income (MAGI) — not your paycheck or even your taxable income. Getting this right can be the difference between a large subsidy and none at all.
Income COUNTED in MAGI
- Wages and salaries
- Net self-employment income (gross revenue minus Schedule C deductions)
- Investment income: dividends, interest, capital gains
- Net rental income
- Alimony received (pre-2019 divorces)
- Unemployment compensation
- Taxable Social Security benefits
Income NOT Counted in MAGI
- Child support received
- Gifts and inheritances
- Veterans disability compensation
- Workers compensation
- Supplemental Security Income (SSI)
- Roth IRA distributions (generally)
Deductions That Lower Your MAGI — and Raise Your Subsidy
- Self-employed health insurance premium deduction — creates a compounding benefit
- Self-employment tax deduction — 50% of SE taxes paid
- Traditional IRA contributions — up to $7,000 ($8,000 if 50+)
- HSA contributions — up to $4,300 self-only / $8,550 family
- Student loan interest — up to $2,500
Household vs. Individual Income
Subsidies are based on household MAGI — all income-earning members of your tax household combined. Adult children who file their own returns are generally not included unless they’re your dependents.
Related: Individual & Family Health Plans | Schedule a Free Consultation
Frequently Asked Questions
What income is used to calculate health insurance subsidies in 2027?
Subsidies are based on MAGI, which includes wages, net self-employment income, investment income, rental income, and most other taxable income.
Does Social Security count as income for ACA subsidies?
Taxable Social Security benefits count. A portion of non-taxable Social Security may also be included in MAGI for subsidy purposes.
Do IRA contributions reduce ACA subsidy income?
Yes. Traditional IRA contributions are above-the-line deductions that reduce MAGI, potentially increasing ACA subsidy eligibility.
Does rental income count for health insurance subsidies?
Net rental income (after allowable expenses) is counted in MAGI for subsidy purposes.
Talk to an Independent Broker — Free
Garden State Benefits is an independent insurance broker licensed in New Jersey and 25 other states. We compare marketplace plans, off-market plans, and subsidy eligibility in a single conversation — at no cost to you.
Open enrollment runs November 1 through January 15. Book a free consultation here or call 856-880-6340.