Adjusted Gross Income (AGI)
Your gross income minus specific adjustments such as student loan interest, IRA contributions, and self-employment tax. AGI is the starting point for calculating your taxable income.
Adjusted Gross Income (AGI) is one of the most important numbers on your tax return. It equals your total gross income — wages, salaries, investment earnings, retirement distributions, and other income — minus a specific set of deductions the IRS calls "adjustments to income" or above-the-line deductions.
Common adjustments include contributions to a Traditional IRA, student loan interest (up to $2,500), half of self-employment tax, and HSA contributions. These adjustments are subtracted before you decide whether to take the standard deduction or itemize.
Your AGI matters because it determines eligibility for many tax credits and deductions. For example, the Child Tax Credit, Earned Income Credit, and education credits all phase out based on AGI thresholds. For 2025, knowing your AGI helps you plan contributions, deductions, and withholding to minimize your overall tax bill.
Related Terms
Gross Income
The total of all income you receive during the year before any deductions or adjustments. Includes wages, interest, dividends, rental income, and business income.
Taxable Income
The portion of your income that is actually subject to federal income tax, calculated by subtracting the standard or itemized deduction from your AGI.
Above-the-Line Deduction
Deductions subtracted from gross income to arrive at AGI, available regardless of whether you itemize. Examples include IRA contributions, student loan interest, and HSA contributions.
Standard Deduction
A fixed dollar amount that reduces your taxable income, available to all filers who do not itemize. For 2025, it is $15,750 for single filers and $31,500 for married filing jointly (OBBBA-adjusted).