Smart Tax Strategies to Help Lower Your MAGI and Keep Your Health Insurance Subsidy

If you're self-employed or have unpredictable income, you know how tricky it can be to estimate your Modified Adjusted Gross Income (MAGI) for the Marketplace. But with the potential return of the subsidy cliff in 2026, getting your income estimate right could make the difference between affordable health insurance—or paying full price.

That’s why it’s time to talk about smart tax planning—and how a great bookkeeper can help.

Why MAGI Matters for Health Insurance

Your MAGI is the number the Marketplace uses to decide if you qualify for premium tax credits (subsidies). Go even $1 over the 400% Federal Poverty Level (FPL) income limit, and if Congress lets the subsidy cliff return, you could lose all your subsidy and have to repay it at tax time.

A good tax strategy now can help you:

• Lower your MAGI

• Stay under the 400% FPL line

• Keep your monthly premiums affordable

What Deductions Lower Your MAGI?

Here are some of the most common tax deductions that can reduce your MAGI:

• Self-employed health insurance premiums

• Retirement contributions (Traditional IRA or SEP IRA for self-employed individuals)

• Health Savings Account (HSA) contributions

• Student loan interest

• Educator expenses (for teachers)

• Business expenses for self-employed individuals, such as:

  • Office supplies and equipment

  • Mileage and vehicle expenses

  • Phone and internet bills

  • Software and subscriptions

  • Meals (business-related)

  • Contract labor

  • Marketing and advertising

  • Continuing education

Each of these can reduce your AGI, which lowers your MAGI and helps you stay within subsidy range.

Why a Bookkeeper Is Your Secret Weapon

If you're self-employed, estimating your year-end MAGI is tough—especially if your income varies or you have large swings in business revenue. That’s where a qualified bookkeeper or tax professional becomes a lifesaver.

A great bookkeeper can:

• Track your income and expenses monthly

• Help forecast your year-end totals

• Identify deductible expenses you may be missing

• Advise you on whether to make a large purchase this year—or wait until next year for better tax timing

• Keep your records organized in case of an audit or subsidy reconciliation

Without a system in place, it’s easy to overshoot your MAGI and lose your subsidy without even realizing it until it’s too late.

Planning Tips for Self-Employed Households

• Make monthly income tracking a habit.

• Set aside time quarterly to meet with a bookkeeper or tax advisor.

• Don’t wait until tax season—plan your deductions now.

• Review your profit and loss statements regularly.

Utah Avenue Insurance Is Here to Help

We specialize in helping self-employed individuals and families understand how their income impacts their health plan. If you're not sure where you stand—or want help estimating your 2026 income—talk to one of our local agents.

Better coverage starts here—let’s keep your subsidy, your coverage, and your peace of mind intact.