PriorTax | What is the Adjusted Gross Income (AGI)

What is the Adjusted Gross Income (AGI)

Adjusted gross income (AGI) is a special calculation of income that determines your eligibility for certain credits and deductions. Most phase out or cut off beyond a certain level of adjusted gross income.

You calculate AGI by subtracting certain above-the-line deductions from your total gross income, which includes all your income from any source. The deductions you can subtract from your gross income to arrive at your AGI include

  • trade and business deductions
  • losses from sale or exchange of property
  • deductions attributable to rents and royalties
  • pensions, profit-sharing, and annuity plans of self-employed individuals
  • retirement savings
  • alimony
  • jury duty pay remitted to employer
  • deduction for clean-fuel vehicles and certain refueling property
  • moving expenses
  • Archer MSAs
  • interest on education loans
  • higher education expenses
  • health savings accounts

  • For a full list, refer to this section of the Internal Revenue Code.

    Be aware that your adjusted gross income is still not the income on which you will be taxed. Your taxable income is determined only after subtracting personal exemptions and itemized deductions from your AGI.

    Make careful note of your AGI each year because when you file next year’s taxes you will need it, or your PIN, to authenticate your e-file.