Yes, 401(k) contributions can reduce both Adjusted Gross Income (AGI) and Modified Adjusted Gross Income (MAGI).
AGI is calculated before deductions like 401(k) contributions are taken into account. When you contribute to a traditional 401(k), the amount you contribute is deducted from your gross income before your AGI is calculated. This reduces your AGI, potentially lowering your taxable income and the amount you owe in taxes.
MAGI is used to determine eligibility for certain tax deductions and credits, as well as for determining eligibility for certain tax-advantaged retirement accounts such as Roth IRAs. Contributions to a traditional 401(k) can reduce MAGI, as they lower your overall taxable income.
Therefore, contributing to a 401(k) can have a dual benefit of reducing both AGI and MAGI, potentially providing tax advantages and increasing eligibility for certain tax benefits.
Last modified: January 8, 2026
