The term modified adjusted gross income (MAGI) refers to an individual's adjusted gross income (AGI) after taking into account certain allowable deductions and tax penalties.

It is an important number to understand since it can help reduce an individual's taxable income (to account for your retirement account contributions), factor in the eligibility for benefits like the student loan interest deduction and the Child Tax Credit, and establish eligibility for income-based Medicaid coverage or health insurance subsidies.