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Adjusted gross income (AGI) is a key figure on your federal income tax return that can affect your eligibility for certain deductions and credits. It also serves as a starting point for calculating your taxable income and helps determine how much you’ll owe in income taxes. For tax year 2025 (filed in 2026), you can find your AGI on page 1, line 11a of the IRS Form 1040.
As you take care of your taxes, make sure you have an adequate financial plan in place, which a financial advisor can help you with.
What Is Adjusted Gross Income (AGI)?
Adjusted gross income (AGI) is a variation of your gross income that accounts for certain deductions that usually make it lower than your gross income. By contrast, gross income generally includes your taxable income from all sources before adjustments to income are taken into account. Because of this distinction, AGI is typically the foundation for calculating how much you’ll owe in taxes.
How to Calculate Your AGI
To determine your adjusted gross income, start with your gross income. This includes wages or salary from a job, bank account interest, stock dividends and rental property income. If you reported self-employment business income on Schedule C, you would include that in your gross income as well.
Bonuses, tips and gambling winnings are also generally part of gross income. Certain alimony received under divorce or separation agreements executed before 2019 may also be taxable. You generally do not include life insurance death benefits received as a beneficiary, child support, loan proceeds, inheritances or gifts in your gross income, though exceptions can apply.
From your gross income, you then subtract certain adjustments to income, commonly called above-the-line deductions, to calculate your AGI. These deductions are generally available whether you take the standard deduction or itemize.
Online tax preparation services and software programs both calculate AGI for you, and automatically enter it into the correct line. Regardless of these convenient features, make sure you enter these amounts correctly when transferring the information from the forms your employer gives you to Form 1040.
Above-the-Line vs. Below-the-Line Deductions
The difference between above-the-line and below-the-line deductions comes down to when they are applied. Above-the-line deductions, also called adjustments to income, are subtracted from gross income to calculate your AGI. These can include deductions for certain IRA contributions, HSA contributions and the deductible portion of self-employment tax.
Below-the-line deductions are applied after your AGI has been calculated and generally reduce your taxable income rather than your AGI. These include the standard deduction or itemized deductions, as well as certain other deductions that can be claimed regardless of whether you itemize.
In simple terms, the calculation generally works like this:
Gross income − above-the-line deductions = AGI
AGI − below-the-line deductions = taxable income
Here’s a closer look at above-the-line and below-the-line deductions:
| Above-the-Line Deductions | Below-the-Line Deductions |
|---|---|
| Traditional IRA contributions | Medical and dental expenses (in excess of 7.5% of AGI) |
| Student loan interest | State and local taxes |
| HSA contributions | Mortgage interest |
| Deductible portion of self-employment tax | Charitable contributions (in excess of 0.5% of AGI) |
| Self-employed retirement contributions | Qualified business income deduction* |
| Self-employed health insurance | Qualified tips* |
| Educator expenses | Overtime* |
| Certain alimony payments | Vehicle loan interest* |
How Your Adjusted Gross Income Affects Your Taxes
AGI can affect your eligibility for certain deductions and credits, as well as the amount you can claim. For instance, consider the effect of AGI on medical and dental expenses for taxpayers who itemize. For tax year 2025, you can generally deduct only qualified medical and dental expenses that exceed 7.5% of your AGI.
AGI or modified AGI can also affect certain education tax benefits and the amount of charitable contributions you can deduct. For 2025, cash contributions to certain qualifying organizations are generally subject to a limit of 60% of AGI, though lower limits can apply to some contributions.
Beginning in 2026, additional rules apply. Itemizers generally can deduct charitable contributions only to the extent they exceed 0.5% of AGI, while non-itemizers may qualify for a limited deduction for certain cash contributions.
Your adjusted gross income is especially important if you live in a state that collects state income taxes. Many states use the AGI from your federal return as the starting point for state income tax calculations.
Use our calculator to understand how tax brackets apply to your earnings.
AGI vs. MAGI vs. Taxable Income
Taxable income is the amount generally used to determine your federal income tax liability after applicable deductions are subtracted from AGI. MAGI, meanwhile, is an adjusted version of AGI used to determine eligibility for certain tax benefits.
For the 2025 and 2026 tax years, the vast majority of taxpayers will likely use the standard deduction rather than itemized deductions. Under current laws, the standard deduction for the 2025 tax year (filed in 2026) is $15,750 for single filers, $31,500 for married couples filing jointly and $23,625 for heads of household. For tax year 2026 (what you file in early 2027) the standard deduction rises to $16,100 for single filers, $32,200 for joint filers and $24,150 for heads of household.
Modified adjusted gross income (MAGI) is another term related to taxable income and adjusted gross income. MAGI comes into play when you’re trying to figure out whether you qualify for certain deductions. For instance, if your MAGI is above certain income limits and you have a workplace retirement plan, you may not be able to take the full deduction for contributing to an IRA.
MAGI is generally calculated by starting with AGI and making certain adjustments, but the exact calculation depends on the tax benefit involved. For example, the MAGI calculation used to determine whether a traditional IRA contribution is deductible requires certain deductions and exclusions to be added back. In some cases, your MAGI may be the same as your AGI.
Bottom Line
Calculating your AGI helps taxpayers figure out how much of their income is taxable. It can be relatively simple if you have a good idea of what parts of your income constitute the figure. With changing tax laws and forms, however, some of these situations can get tricky.
Financial Planning Tips
- If your tax situation is complex or you want advice on investing and financial planning, try speaking with a financial advisor. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- One of the best ways to take care of your money is to set a monthly budget for you and your family. Stop by SmartAsset’s free budget calculator to begin building a plan for yourself.
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