Above-the-line deductions, called “adjustments to income” on your return, are subtractions that reduce your gross income before you arrive at adjusted gross income (AGI). They work whether you take the standard deduction or itemize, and almost all of them are claimed on Schedule 1 of Form 1040, with the total flowing to line 10 of the main return.1Internal Revenue Service. Schedule 1 (Form 1040) – Additional Income and Adjustments to Income A lower AGI also matters for what comes next: dozens of credits, deductions, and phase-out thresholds use AGI as their gatekeeper, so a dollar shaved off here can preserve credits worth far more than the deduction itself.
Retirement Contributions
Retirement contributions are usually the largest above-the-line adjustment available to a typical filer.
Traditional IRA
You can contribute up to $7,500 to a traditional IRA for 2026.2Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 Whether the contribution is deductible depends on whether you or your spouse is covered by a workplace retirement plan such as a 401(k). If neither of you is covered, the full contribution is deductible regardless of income. If coverage exists, the deduction phases out over these ranges:
- Single filer covered by a workplace plan: $81,000 to $91,000
- Married filing jointly, contributor covered: $129,000 to $149,000
- Not covered but spouse is: $242,000 to $252,000
- Married filing separately, covered: $0 to $10,000
You need earned income at least equal to the contribution, and the contribution must be made by your filing deadline, usually April 15 of the following year.
SEP and SIMPLE IRAs for the Self-Employed
If you work for yourself, small-business retirement plans give you much higher deductible limits. A SEP IRA allows contributions of up to 25% of compensation or $72,000 for 2026, whichever is less.3Internal Revenue Service. SEP Contribution Limits (Including Grandfathered SARSEPs) For a sole proprietor, the effective rate on net earnings works out closer to 20% once the math accounts for the deduction itself.
A SIMPLE IRA allows employee elective deferrals of up to $17,000 in 2026, with a $4,000 catch-up at age 50 or older, and a higher $5,250 catch-up for filers between ages 60 and 63.4Internal Revenue Service. Retirement Topics – SIMPLE IRA Contribution Limits
Health Savings Account Contributions
HSA contributions are deductible above the line if you are enrolled in a qualifying high-deductible health plan. For 2026, the annual contribution limit is $4,400 for self-only coverage and $8,750 for family coverage, with a $1,000 catch-up available at age 55 or older.5Internal Revenue Service. Notice 2026-05
To qualify, your health plan must have a minimum annual deductible of $1,700 for self-only coverage or $3,400 for family coverage in 2026, and out-of-pocket maximums cannot exceed $8,500 (self-only) or $17,000 (family). Contributions must be in cash, and you cannot contribute once you enroll in Medicare.6Office of the Law Revision Counsel. 26 USC 223 – Health Savings Accounts
The HSA carries a tax benefit no other account matches: the contribution is deductible, growth inside the account is tax-free, and withdrawals for qualified medical expenses are never taxed.
Self-Employment Adjustments
If you file a Schedule C or otherwise earn self-employment income, three adjustments are available that W-2 employees do not get.
Half of Self-Employment Tax
Self-employed workers pay both halves of Social Security and Medicare taxes. You can deduct the employer-equivalent half of self-employment tax as an adjustment to income, which lowers your income tax by reducing AGI (it does not reduce the SE tax itself).7Office of the Law Revision Counsel. 26 USC 164 – Taxes – Section: Deduction for One-Half of Self-Employment Taxes
Self-Employed Health Insurance
With a net profit from self-employment, you can deduct 100% of premiums paid for medical, dental, and long-term care coverage for yourself, your spouse, your dependents, and your children under age 27. The plan must be established under your business, and the deduction cannot exceed your net self-employment income. You cannot claim it for any month in which you were eligible to participate in a subsidized health plan through your own, your spouse’s, or a dependent’s employer, whether you actually enrolled or not.8Internal Revenue Service. Instructions for Form 7206
Student Loan Interest
You can deduct up to $2,500 of interest paid on a qualified education loan during the year.9Office of the Law Revision Counsel. 26 USC 221 – Interest on Education Loans The loan must have been taken out solely to pay qualified higher education expenses, and the borrower must be legally obligated to repay it. Parent PLUS loans qualify for the parent, not the student.
The deduction phases out based on modified AGI, with the thresholds adjusted for inflation each year. In recent years, phase-out has started around $85,000 for single filers and disappeared near $100,000, with joint-filer ranges roughly $85,000 higher. Check IRS Publication 970 for the exact 2026 thresholds. Your servicer sends Form 1098-E when interest paid reaches $600, but you can still claim the deduction on smaller amounts.10Internal Revenue Service. About Form 1098-E, Student Loan Interest Statement
Educator Expenses
K-12 teachers who work at least 900 hours during the school year can deduct up to $300 in unreimbursed classroom spending for 2026. Qualifying purchases include books, supplies, computer equipment and software, and supplementary teaching materials. When both spouses are eligible educators filing jointly, the combined limit is $600, with each capped at $300 of their own expenses.11Internal Revenue Service. Topic No. 458, Educator Expense Deduction Nonathletic supplies used in health or physical education courses do not qualify, though athletic supplies do.
Alimony Under Pre-2019 Agreements
Alimony is deductible above the line only if the divorce or separation agreement was finalized before January 1, 2019. Older agreements that were later modified keep the deduction unless the modification explicitly adopts the post-2018 rules.12Internal Revenue Service. Topic No. 452, Alimony and Separate Maintenance For any agreement executed after 2018, the payer cannot deduct alimony and the recipient does not report it as income.13Office of the Law Revision Counsel. 26 USC 215 – Repealed
Smaller Adjustments That Are Easy to Miss
Several narrower adjustments still show up on Schedule 1 and are worth checking against your situation.
- Early withdrawal penalties on savings. If your bank charged a penalty for cashing out a CD or other time deposit before maturity, the penalty is deductible. The amount appears on Form 1099-INT or Form 1099-OID.14Internal Revenue Service. Penalties for Early Withdrawal
- Jury duty pay handed to your employer. If your employer kept paying your salary during jury service and required you to turn over the jury stipend, report the stipend as income and deduct the amount you handed back on Schedule 1, line 24a.15Internal Revenue Service. Publication 525, Taxable and Nontaxable Income
- Military moving expenses. Active-duty members of the Armed Forces relocating on a permanent change of station can deduct unreimbursed moving costs. This is the only group still eligible after 2017. Qualifying moves include the first duty post, moves between posts, and the move home within one year of ending active duty.16Internal Revenue Service. Instructions for Form 3903
- Qualified performing artists. You need at least two employers in the field during the year, at least $200 from each, business expenses over 10% of your performing arts income, and AGI of $16,000 or less before the deduction.17Internal Revenue Service. Instructions for Form 2106
- Fee-basis state or local government officials. If your government compensation comes partly or entirely from fees rather than a salary, unreimbursed job expenses come off above the line.17Internal Revenue Service. Instructions for Form 2106
Reporting on Schedule 1
Part II of Schedule 1 assigns each adjustment its own line: educator expenses on line 11, HSA contributions on line 13, the deductible half of self-employment tax on line 15, self-employed health insurance on line 17, IRA contributions on line 20, and student loan interest on line 21. Line 26 totals the adjustments and carries to line 10 of Form 1040.1Internal Revenue Service. Schedule 1 (Form 1040) – Additional Income and Adjustments to Income
Documentation depends on the deduction. Loan servicers send Form 1098-E for student loan interest. Financial institutions send Form 5498 for IRA contributions and Forms 1099-INT or 1099-OID for early withdrawal penalties. Keep your own receipts for educator expenses, and premium statements for self-employed health insurance. Self-employed health insurance uses Form 7206 as its calculation worksheet. The IRS generally requires you to keep supporting records for at least three years from the date you filed your return.18Internal Revenue Service. How Long Should I Keep Records