Adjusted gross income, or AGI, is your total income for the year minus a specific set of deductions the tax code lets you take before anything else. It sits on Line 11 of Form 1040, and it’s the number the IRS uses to decide which credits and deductions you qualify for. Lenders, financial aid offices, and state tax agencies rely on it too, which is why the figure follows you well beyond your federal return.1Internal Revenue Service. Adjusted Gross Income
How AGI Is Calculated
The math has two steps. First, add up your total income from every source. Then subtract the deductions Section 62 of the Internal Revenue Code allows you to take before choosing the standard deduction or itemizing. Those subtractions are called “above-the-line” deductions because they sit above the line where AGI is reported. Every taxpayer works through the same two steps, no matter their filing status or income level.2Office of the Law Revision Counsel. 26 USC 62 – Adjusted Gross Income Defined
What Counts as Income
Federal law defines gross income broadly. It includes income from virtually any source unless the tax code specifically excludes it.3Office of the Law Revision Counsel. 26 USC 61 – Gross Income Defined Wages, salaries, tips, freelance earnings, and business profits all count. So do interest, dividends, and capital gains from selling property or stocks. Retirement plan distributions, rental income, gambling winnings, and alimony received under pre-2019 divorce agreements are also part of the total.
Deductions That Lower Your AGI
Above-the-line deductions are especially useful because you can claim them whether you take the standard deduction or itemize. For 2026, the most common ones include:4Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
- Traditional IRA contributions up to $7,500, or $8,600 if you’re 50 or older. The deduction can be reduced or eliminated at higher incomes if you or your spouse is covered by a workplace retirement plan.5Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
- HSA contributions up to $4,400 for self-only coverage or $8,750 for family coverage, if you’re enrolled in a high-deductible health plan.6Internal Revenue Service. Notice 2026-5 – Expanded Availability of Health Savings Accounts
- Student loan interest up to $2,500 per year, phasing out at higher income levels.
- Educator expenses up to $350 for unreimbursed classroom supplies.
- Half of self-employment tax and self-employed health insurance premiums for people who work for themselves.
- Qualifying moving expenses for active-duty Armed Forces members relocating under orders.
Alimony follows a date-based rule. If your divorce or separation agreement was finalized before 2019, the payer can deduct payments and the recipient reports them as income. For agreements executed after December 31, 2018, neither happens: no deduction, no reported income.7Internal Revenue Service. Alimony, Child Support, Court Awards, Damages
Every dollar of above-the-line deduction does double duty. It lowers the income you’re taxed on, and it can pull your AGI under a threshold that unlocks a larger credit or preserves eligibility for something like a Roth IRA contribution.
AGI vs. Taxable Income
AGI is not the amount you actually pay tax on. After you calculate AGI, you subtract either the standard deduction or your itemized deductions to get taxable income. For 2026, the standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household. A single filer with an AGI of $60,000 who takes the standard deduction ends up with $43,900 in taxable income.
The distinction matters because different parts of the tax code look at different numbers. Most credits and phase-outs are keyed to AGI or Modified AGI. Your tax bracket is set by taxable income. Mixing the two up is one of the most common errors people make when estimating what they’ll owe.
How AGI Affects Tax Credits
AGI is the gatekeeper for most federal tax credits. Cross a threshold and the credit shrinks or disappears.
The Child Tax Credit is worth up to $2,200 per qualifying child for 2026. You get the full amount if your income stays at or below $200,000, or $400,000 for joint filers, and phases out gradually above that. If your tax liability is low, the refundable Additional Child Tax Credit can pay up to $1,700 per child as long as you have at least $2,500 in earned income.8Internal Revenue Service. Child Tax Credit
The Earned Income Tax Credit is aimed at low- and moderate-income workers and can exceed $8,000 for families with three or more qualifying children. The amount depends on your income, filing status, and number of children, with AGI limits adjusted for inflation each year. It’s refundable, so you can receive it even if you owe no federal tax.9Internal Revenue Service. Earned Income and Earned Income Tax Credit (EITC) Tables
The Premium Tax Credit helps offset the cost of marketplace health insurance. Eligibility is based on your household’s Modified AGI relative to the federal poverty level. Congress temporarily removed the upper income cap for tax years 2021 through 2025. For 2026, the standard rule generally applies: eligibility runs from 100% to 400% of the poverty line for your family size.10Internal Revenue Service. Questions and Answers on the Premium Tax Credit
How AGI Limits Itemized Deductions
If you itemize, AGI caps how much of certain expenses you can write off.
- Medical expenses are deductible only to the extent they exceed 7.5% of your AGI. With an AGI of $80,000, the first $6,000 in medical costs produces no tax benefit.11Internal Revenue Service. Topic No. 502 – Medical and Dental Expenses
- Cash donations to qualifying charities are generally deductible up to 60% of AGI. Gifts of appreciated property have lower limits, typically 30%.
- Personal casualty and theft losses from a federally declared disaster must be reduced by $100 per event and by 10% of AGI before any deduction applies. Qualified disaster losses may skip the 10% reduction.12Internal Revenue Service. Publication 547 – Casualties, Disasters, and Thefts
A higher AGI raises each of these floors, which is why the medical expense deduction is out of reach for most filers in a typical year.
What Modified AGI Adds to the Picture
Some tax provisions use Modified Adjusted Gross Income, or MAGI, instead of plain AGI. MAGI starts with AGI and adds back specific items that were excluded or deducted. There’s no single MAGI formula: the add-backs depend on which credit or deduction is being calculated.13Internal Revenue Service. Modified Adjusted Gross Income
For Roth IRA contributions, MAGI adds back items like foreign earned income and the student loan interest deduction. For 2026, single filers can make full Roth contributions with MAGI up to $153,000, with eligibility phasing out entirely at $168,000. Married couples filing jointly face a phase-out range of $242,000 to $252,000.
The Net Investment Income Tax uses its own version of MAGI. If it exceeds $200,000 for single filers or $250,000 for joint filers, you owe an extra 3.8% on the lesser of your net investment income or the amount above the threshold. These thresholds are not adjusted for inflation.14Internal Revenue Service. Net Investment Income Tax
The Premium Tax Credit version of MAGI adds tax-exempt interest and nontaxable Social Security benefits. Traditional IRA deductibility uses yet another set of add-backs. Your MAGI for one purpose can be thousands of dollars off from your MAGI for another, so if you’re planning around a specific benefit, check which formula applies.
Finding Your AGI from a Prior Year
Prior-year AGI comes up more often than people expect. The IRS uses it as an identity check when you e-file, and mortgage lenders often ask for it during underwriting.
Your AGI is on Line 11 of Form 1040. The same is true for Form 1040-SR, the version for taxpayers 65 and older. If you don’t have a copy of the return, the fastest way to retrieve the number is to log into your IRS Online Account at irs.gov and select the year you need under the Records and Status tab. You can also request a tax return transcript, which shows most line items from your original return. Transcripts are available online, by calling 800-908-9946, or by mailing Form 4506-T, with 5 to 10 business days for mailed copies to arrive.15Internal Revenue Service. Transcript Types for Individuals and Ways to Order Them
AGI and State Taxes
About 30 states or more use federal AGI as the starting point for their own income tax calculations. In those states, the same above-the-line deductions that lower your federal AGI also lower the number your state begins with, though states may add back or subtract certain items to reach state taxable income. States with no income tax get no direct effect from AGI, though the figure can still matter for property tax credits or other benefit programs that reference federal income.