Your adjusted gross income (AGI) is one of the most important numbers on your tax return. It determines what deductions you can take, what credits you’re eligible for, and even whether you can contribute to a Roth IRA.
Quick answer: AGI is your total income minus specific “above-the-line” deductions like retirement contributions, student loan interest, and HSA contributions. Find it on line 11 of Form 1040. For 2025 taxes filed in 2026, you’ll need last year’s AGI to e-file.
What Is Adjusted Gross Income?
AGI is the starting point for calculating your taxes. It’s your total gross income from all sources, minus specific adjustments the IRS allows.
| Term | Definition |
|---|---|
| Gross Income | All income from wages, investments, business, rental, etc. |
| Adjustments | Specific deductions subtracted before the standard deduction |
| AGI | Gross Income − Adjustments |
| Taxable Income | AGI − Standard/Itemized Deductions |
AGI vs. Other Income Terms
| Income Type | What It Includes | Where to Find It |
|---|---|---|
| Gross Income | All income before any deductions | Add up all income sources |
| AGI | Gross income minus adjustments | Form 1040, line 11 |
| Modified AGI (MAGI) | AGI plus certain items added back | Varies by tax benefit |
| Taxable Income | AGI minus deductions | Form 1040, line 15 |
How to Calculate AGI
AGI = Gross Income − Above-the-Line Adjustments
Step 1: Calculate Gross Income
Add all income sources:
| Income Source | Form |
|---|---|
| Wages, salaries, tips | W-2, Box 1 |
| Interest income | 1099-INT |
| Dividend income | 1099-DIV |
| Business income/loss | Schedule C |
| Capital gains/losses | Schedule D |
| IRA distributions | 1099-R |
| Pensions and annuities | 1099-R |
| Rental income | Schedule E |
| Unemployment compensation | 1099-G |
| Social Security benefits (taxable portion) | SSA-1099 |
| Other income | Various |
Step 2: Subtract Adjustments (Above-the-Line Deductions)
| Adjustment | 2026 Limit | Who Qualifies |
|---|---|---|
| Traditional IRA contributions | $7,000 ($8,000 if 50+) | Income limits apply if covered by workplace plan |
| HSA contributions | $4,300 (self) / $8,550 (family) | Must have HDHP |
| Student loan interest | Up to $2,500 | MAGI under $95,000 (single) |
| Self-employment tax (half) | 50% of SE tax | Self-employed individuals |
| Self-employed health insurance | 100% of premiums | Self-employed, not eligible for employer plan |
| Self-employed retirement (SEP, SIMPLE) | Varies by plan | Self-employed individuals |
| Educator expenses | $300 | K-12 teachers |
| Alimony paid (pre-2019 divorces) | Amount paid | Divorces finalized before 2019 |
| Moving expenses (military only) | Actual expenses | Active duty military |
| Penalty on early savings withdrawal | Amount charged | Anyone who paid penalty |
Step 3: The Result Is Your AGI
Example calculation:
| Line Item | Amount |
|---|---|
| Wages (W-2) | $85,000 |
| Interest income | $500 |
| Dividends | $1,200 |
| Side business profit | $8,000 |
| Gross Income | $94,700 |
| − Traditional IRA contribution | −$7,000 |
| − Student loan interest | −$2,500 |
| − Half of SE tax ($8,000 × 15.3% ÷ 2) | −$612 |
| AGI | $84,588 |
Why AGI Matters
Your AGI affects eligibility for nearly every tax benefit:
Retirement Account Limits
| Account | AGI Phase-Out (Single) | AGI Phase-Out (MFJ) |
|---|---|---|
| Roth IRA contributions | $150,000–$165,000 | $236,000–$246,000 |
| Traditional IRA deduction (if covered by workplace plan) | $79,000–$89,000 | $126,000–$146,000 |
| Saver’s Credit | Under $39,500 (full) | Under $79,000 (full) |
Tax Credits
| Credit | AGI Phase-Out Begins |
|---|---|
| Child Tax Credit ($2,000/child) | $200,000 (single) / $400,000 (MFJ) |
| Earned Income Tax Credit | $18,591–$59,899 (depends on children) |
| American Opportunity Credit | $80,000 (single) / $160,000 (MFJ) |
| Lifetime Learning Credit | $80,000 (single) / $160,000 (MFJ) |
| Child and Dependent Care Credit | No phase-out, but percentage decreases |
| Adoption Credit | $252,150 |
Deductions
| Deduction | AGI Requirement |
|---|---|
| Medical expenses | Must exceed 7.5% of AGI |
| Casualty losses (disaster areas) | Must exceed 10% of AGI |
| Student loan interest | Phase-out: $75,000–$90,000 (single) |
| Tuition and fees | Phase-out: $65,000–$80,000 (single) |
Modified AGI (MAGI)
MAGI is AGI with certain deductions added back. The calculation varies depending on which tax benefit you’re evaluating.
Common MAGI Additions
| For This Tax Benefit | Add Back to AGI |
|---|---|
| Roth IRA eligibility | Traditional IRA deduction, student loan interest deduction, foreign earned income exclusion |
| Medicare premium surcharge | Tax-exempt interest, foreign earned income |
| Premium tax credit (ACA) | Tax-exempt interest, foreign earned income, non-taxable Social Security |
MAGI for Roth IRA Contributions
MAGI = AGI + Traditional IRA deduction + Student loan interest deduction + Foreign earned income exclusion + Foreign housing exclusion
Example:
- AGI: $145,000
- Traditional IRA deduction taken: $7,000
- MAGI for Roth IRA: $152,000
With MAGI of $152,000, a single filer is in the Roth IRA phase-out range ($150,000–$165,000) and can only make a partial contribution.
How to Find Your AGI
| Method | Where to Look |
|---|---|
| Current year return | Form 1040, line 11 |
| Previous year return | Form 1040 from last year, line 11 |
| IRS online account | irs.gov/account |
| Tax transcript | Request at irs.gov/individuals/get-transcript |
| Tax software | Log in to your account from last year |
Finding Last Year’s AGI for E-Filing
To e-file, you need to verify your identity using last year’s AGI. If you can’t find it:
- IRS Online Account: Create or log in at irs.gov/account
- Get Transcript: Request online, by mail, or by phone
- Tax Software: Check your saved returns in TurboTax, H&R Block, etc.
- Enter $0: If you didn’t file last year
Strategies to Lower Your AGI
Lowering your AGI can unlock tax credits and deductions. Here are legal ways to reduce it:
Before Year-End
| Strategy | Potential AGI Reduction |
|---|---|
| Max out traditional 401(k) | Up to $23,500 ($31,000 if 50+) |
| Contribute to traditional IRA | Up to $7,000 ($8,000 if 50+) |
| Max HSA contributions | Up to $4,300 (self) / $8,550 (family) |
| Harvest capital losses | Offset gains + $3,000 excess |
| Defer income (if possible) | Varies |
| Increase pre-tax FSA contributions | Up to $3,200 |
Self-Employed Strategies
| Strategy | Potential AGI Reduction |
|---|---|
| SEP-IRA contributions | Up to 25% of net SE income (max $69,000) |
| Solo 401(k) contributions | Up to $69,000 ($76,500 if 50+) |
| Health insurance deduction | Full premium amount |
| Business expenses | Legitimate expenses reduce SE income |
AGI on Form 1040
Here’s where AGI fits on your tax return:
| Form 1040 Line | Description |
|---|---|
| Lines 1–8 | Various income sources |
| Line 9 | Total income (gross income) |
| Line 10 | Adjustments to income |
| Line 11 | Adjusted Gross Income (AGI) |
| Line 12 | Standard or itemized deduction |
| Line 14 | Qualified business income deduction |
| Line 15 | Taxable income |
Common AGI Questions
Does 401(k) affect AGI?
Traditional 401(k): Reduces your W-2 wages, so it lowers gross income (and AGI) automatically. Roth 401(k): Does NOT reduce AGI — contributions are after-tax.
Do HSA contributions reduce AGI?
Yes. HSA contributions are an above-the-line deduction, reducing AGI dollar-for-dollar (up to the annual limit).
Does the standard deduction reduce AGI?
No. The standard deduction (or itemized deductions) comes AFTER AGI. It reduces your taxable income, not your AGI.
Is Social Security included in AGI?
Only the taxable portion (0%, 50%, or 85% depending on your income) is included in AGI.
AGI Examples by Income Level
Example 1: W-2 Employee, $75,000 Salary
| Item | Amount |
|---|---|
| Wages | $75,000 |
| 401(k) contribution (pre-tax) | Already excluded from W-2 |
| Interest/dividends | $300 |
| Gross Income | $75,300 |
| Traditional IRA contribution | −$7,000 |
| AGI | $68,300 |
Example 2: Self-Employed, $120,000 Net Profit
| Item | Amount |
|---|---|
| Self-employment income | $120,000 |
| Interest | $200 |
| Gross Income | $120,200 |
| Self-employment tax (half) | −$8,478 |
| SEP-IRA (25% of net SE income after SE tax) | −$27,881 |
| Health insurance premiums | −$9,600 |
| AGI | $74,241 |
Example 3: High Earner Checking Roth IRA Eligibility
| Item | Amount |
|---|---|
| Wages | $180,000 |
| RSU vesting | $25,000 |
| Dividends | $3,000 |
| Gross Income | $208,000 |
| Traditional 401(k) (maxed) | Already excluded |
| HSA contribution | −$4,300 |
| AGI | $203,700 |
| MAGI (for Roth IRA) | $203,700 |
Result: MAGI exceeds $165,000 limit for single filers. Cannot contribute to Roth IRA directly (but backdoor Roth is available).
Bottom Line
- AGI = Gross income minus above-the-line adjustments
- Find it on Form 1040, line 11
- Affects eligibility for credits, deductions, and retirement contributions
- Lower AGI = more tax benefits
- Use 401(k), IRA, and HSA contributions to reduce AGI
- MAGI adds some deductions back — check requirements for specific benefits