Adjusted gross income on a tax return is your total income for the year minus a specific set of adjustments the tax code allows, and you’ll find it on Line 11 of Form 1040.1Internal Revenue Service. Adjusted Gross Income It sits between raw gross income and taxable income, and almost every eligibility test on the rest of the return — credits, deduction floors, phase-outs, surtaxes — runs off that single number. Shift your AGI up or down by a few hundred dollars and the ripple can be larger than the shift itself.
Where AGI Sits on Form 1040
The IRS builds AGI in three lines. Line 9 is your total income. Line 10 is the sum of your above-the-line adjustments, which come from Schedule 1, Part II. Line 11 is Line 9 minus Line 10, and that’s your AGI.1Internal Revenue Service. Adjusted Gross Income
AGI is not your taxable income. Your standard deduction or itemized deductions, along with the qualified business income deduction, come off after AGI is set to produce taxable income further down the form.2Internal Revenue Service. Definition of Adjusted Gross Income Mixing the two is one of the more common mistakes when people try to reverse-engineer their return.
What Counts as Gross Income
Gross income is defined broadly. The statute says it means all income from whatever source derived, unless a specific provision excludes it, and the 14 categories it lists are examples rather than a closed set.3Office of the Law Revision Counsel. 26 U.S. Code 61 – Gross Income Defined For individual filers, the items that show up most often are:
- Wages, salaries, and tips
- Interest and dividends
- Business income from self-employment
- Capital gains
- Rental income
- Retirement distributions and annuities
- Unemployment compensation
- Taxable Social Security benefits
- Taxable state tax refunds
If money came in and no exclusion applies, it belongs in gross income.
Income That Never Reaches Your AGI
A handful of receipts are specifically excluded by statute and never enter the calculation at all.4Office of the Law Revision Counsel. 26 U.S. Code Subtitle A Chapter 1 Subchapter B Part III – Items Specifically Excluded From Gross Income The ones most people encounter are life insurance proceeds paid because of someone’s death, gifts and inheritances, interest on state and local (municipal) bonds, workers’ compensation and certain personal injury settlements, qualified scholarships used for tuition and required fees, employer contributions to health insurance and cafeteria plans, and up to $250,000 of gain ($500,000 for married joint filers) on the sale of your home if you meet the ownership and use tests.
The edges catch people. Scholarship money spent on room and board is taxable even though scholarship dollars used for tuition are not. When you’re unsure whether something is excluded, the safest test is to look for the specific statutory exclusion; if none exists, treat it as gross income.
The Adjustments That Lower Your AGI
After gross income is totaled, Schedule 1, Part II lets you subtract a defined set of adjustments to income, often called above-the-line deductions.2Internal Revenue Service. Definition of Adjusted Gross Income You get these whether or not you later itemize, which is what makes them valuable: every dollar here lowers AGI, and a lower AGI can preserve credits and deductions you’d otherwise lose downstream.
Retirement and Health Savings Contributions
A traditional IRA contribution is deductible, but with limits if you’re covered by a workplace retirement plan. For 2026, that deduction phases out between $81,000 and $91,000 of modified AGI for single filers and between $129,000 and $149,000 for joint filers.5Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 If neither you nor your spouse has a workplace plan, you can take the full deduction regardless of income.
Health Savings Account contributions are also deductible above the line as long as you’re enrolled in a high-deductible health plan.6Internal Revenue Service. Publication 969 (2025), Health Savings Accounts and Other Tax-Favored Health Plans The 2026 contribution limit is $4,400 for self-only coverage and $8,750 for family coverage, with no income-based phase-out.7Internal Revenue Service. Notice 2026-05, 2026 Inflation-Adjusted Amounts for Health Savings Accounts
Half of Self-Employment Tax
Self-employed workers pay both the employer and employee shares of Social Security and Medicare taxes. To match the treatment of W-2 employees, the code lets you deduct half of your self-employment tax as an adjustment to income.8Internal Revenue Service. Topic No. 554, Self-Employment Tax The figure is calculated on Schedule SE and carried to Schedule 1.
Student Loan Interest
Interest paid on a qualified student loan is deductible up to $2,500 a year. For 2026, the deduction starts phasing out at $85,000 of modified AGI for single filers ($175,000 for joint filers) and disappears at $100,000 ($205,000 joint).2Internal Revenue Service. Definition of Adjusted Gross Income
Educator Expenses
Eligible K-12 teachers, counselors, and principals can deduct up to $300 of unreimbursed classroom expenses without itemizing. If both spouses on a joint return qualify as educators, the combined cap is $600.9Internal Revenue Service. Topic No. 458, Educator Expense Deduction
Alimony and Military Moving Expenses
Alimony is deductible as an above-the-line adjustment only if your divorce or separation agreement was finalized on or before December 31, 2018. For agreements entered after that date, alimony is neither deductible by the payer nor taxable to the recipient.10Internal Revenue Service. Publication 504, Divorced or Separated Individuals A pre-2019 agreement modified after 2018 keeps the old rules unless the modification says otherwise.
Moving expenses were eliminated as an adjustment for most taxpayers after 2017. Active-duty military members who relocate on a permanent change of station orders can still deduct unreimbursed moving costs.11Internal Revenue Service. Publication 3 (2025), Armed Forces Tax Guide
Why Your AGI Matters So Much
AGI (or a modified version of it) is the gatekeeper for a long list of tax benefits. A few examples show how directly the number controls what you get.
Roth IRA eligibility phases out based on modified AGI. For 2026, single filers lose it entirely at $168,000 and joint filers at $252,000.5Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 The American Opportunity Tax Credit, worth up to $2,500 per student, phases out between $80,000 and $90,000 of MAGI for single filers and $160,000 to $180,000 for joint filers, and those thresholds are not indexed for inflation.12Internal Revenue Service. American Opportunity Tax Credit The Earned Income Tax Credit cuts off entirely once AGI exceeds the limit for your filing status and number of children, which for 2025 ranged from roughly $19,100 to about $68,700.13Internal Revenue Service. Earned Income and Earned Income Tax Credit (EITC) Tables
AGI also sets the floor for the medical expense deduction. If you itemize, only medical and dental expenses above 7.5% of AGI count.14Internal Revenue Service. Publication 502 (2025), Medical and Dental Expenses At $80,000 of AGI the floor is $6,000; at $120,000 it’s $9,000. The higher your AGI, the more of the deduction disappears.
And the 3.8% Net Investment Income Tax kicks in when modified AGI exceeds $200,000 for single filers or $250,000 for joint filers.15Internal Revenue Service. Topic No. 559, Net Investment Income Tax Those thresholds have never been adjusted for inflation since the tax took effect in 2013. An above-the-line adjustment that pulls MAGI below the line can eliminate the surtax entirely.
AGI vs. Modified AGI
Many provisions don’t test AGI directly. They test modified adjusted gross income, which starts with AGI and adds back specific items.16Internal Revenue Service. Modified Adjusted Gross Income There is no single MAGI formula; the add-backs depend on which credit, deduction, or surtax you’re testing.
For Roth IRA eligibility, MAGI is AGI plus the traditional IRA deduction, student loan interest deduction, excluded foreign earned income, and a few other items. For the Premium Tax Credit on marketplace health insurance, MAGI is AGI plus tax-exempt bond interest, excluded foreign income, and nontaxable Social Security benefits.16Internal Revenue Service. Modified Adjusted Gross Income Your MAGI for one purpose may not match your MAGI for another even though both start from the same AGI.
For most W-2 employees with no foreign income, the add-backs are zero or close to it, and AGI and MAGI end up identical. The distinction becomes important if you have excluded foreign earned income, a traditional IRA deduction near a phase-out, or nontaxable Social Security benefits.
Using Last Year’s AGI to E-File
Your prior-year AGI has one more job: the IRS uses it to verify your identity when you file electronically. If you e-file without an Identity Protection PIN, the system asks for the AGI from Line 11 of your previous Form 1040. Enter the wrong number and the return is rejected.17Internal Revenue Service. Validating Your Electronically Filed Tax Return
If you don’t have last year’s return in front of you, you have a few ways to retrieve the figure:
- Sign in to your IRS online account at irs.gov and check the Tax Records tab for an immediate view.
- Open last year’s tax software, which typically stores the prior return.
- Request a tax transcript through irs.gov or by calling 800-908-9946; mail delivery takes 5 to 10 days.
If you have an Identity Protection PIN, you can enter that instead of a prior-year AGI. The IRS mails IP PINs to identity theft victims on Notice CP01A, and anyone can request one through the Get an IP PIN tool on irs.gov.17Internal Revenue Service. Validating Your Electronically Filed Tax Return