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Above-the-Line Deductions

Above-the-line deductions are deductions that you subtract directly from your gross income and are separate from normal itemized deductions, which you subtract from your adjusted gross income.

Only a few above-the-line deductions are allowed by the Internal Revenue Code, including

  • trade and business deductions
  • losses from sale or exchange of property
  • deductions attributable to rents and royalties
  • certain deductions of life tenants and income beneficiaries of property
  • pension, profit-sharing, and annuity plans of self-employed individuals, and
  • Moving expenses


  • Above-the-line deductions are more beneficial than regular deductions for two reasons. First, they can be taken by anyone, regardless of whether you take the standard deduction or itemize deductions. Second, above the line deductions decrease your adjusted gross income (AGI).

    Your AGI is arrived at by subtracting above-the-line deductions from your gross income. Itemized deductions are then subtracted from your AGI to arrive at your taxable income. A lower AGI is important because it may help you qualify for more credits and deductions that you otherwise would not be able to take.