Adjusted Gross Income

Adjusted Gross Income is your total gross income minus a specific set of above-the-line adjustments, deductions you can claim regardless of whether you itemize or take the standard deduction. It sits between gross income and taxable income in the tax calculation sequence, and it's the figure many other tax rules key off of.

AGI matters beyond just computing your final tax bill. Eligibility for IRA deductions, certain education credits, and various phase-outs are all measured against AGI, not your gross salary or your final taxable income. The Tax Refund Estimator calculates AGI as an intermediate step toward your refund or balance due.

AGI = Gross Income − Above-the-Line Adjustments

Common adjustments include traditional 401(k)/IRA contributions, HSA contributions, and student loan interest.

Someone earns $95,000 in wages and interest income combined, contributes $6,000 to a traditional IRA, and pays $2,000 in student loan interest.

• Gross income: $95,000
• Adjustments: $6,000 (IRA) + $2,000 (student loan interest) = $8,000
• AGI: $95,000 − $8,000 = $87,000

That $87,000 figure, not the original $95,000, is what determines eligibility for many income-based tax benefits.

• AGI drives eligibility thresholds across the tax code. Roth IRA contribution limits, the student loan interest deduction, and several credits all phase out based on AGI.
• Above-the-line deductions are more valuable than itemized ones. They reduce AGI directly and are available whether or not you itemize, unlike Schedule A deductions.
• Modified AGI adds some items back for specific calculations. Certain credits and limits use a slightly adjusted version of AGI, so the exact eligibility figure can differ by which benefit you're checking.
• AGI appears on a specific line of your tax return. It's a single number lenders and financial aid applications often ask for directly, since it's a standardized measure of income.
• Lowering AGI through pre-tax contributions can unlock other benefits. Contributing more to a 401(k) doesn't just save on income tax now, it can also help you qualify for AGI-based credits you'd otherwise phase out of.