Guides
What Is Adjusted Gross Income (AGI)? How to Calculate It
Adjusted gross income (AGI) is your total taxable income from all sources minus a specific set of “above-the-line” adjustments. It sits on line 11 of Form 1040 and works as the pivot point of your return: the IRS uses it as the starting figure for taxable income, and dozens of credits, deductions, and phase-outs key off it. AGI is calculated before you take the standard or itemized deduction.
Your AGI is not the same as your gross income, your taxable income, or your take-home pay. It is a defined statutory number under Internal Revenue Code Section 62, and getting it right matters because a single dollar over a threshold can cost you a credit worth thousands.
What Adjusted Gross Income Means
AGI is gross income minus the adjustments listed in Part II of Schedule 1 (Form 1040). Gross income includes wages, tips, interest, dividends, capital gains, business profit, rental income, retirement distributions, and other taxable income. Subtract the allowed adjustments and the result is your AGI on Form 1040 line 11.
Gross income is the raw total before any subtractions. AGI removes the above-the-line adjustments only. Taxable income is a later, smaller number: AGI minus your standard or itemized deduction and, for 2025 through 2028, minus the new Schedule 1-A deductions. The three figures move down the return in that order.
The adjustments that reduce AGI are called “above-the-line” because they sit above the AGI line on the form. You can claim them whether you itemize or take the standard deduction, which makes them more broadly useful than itemized deductions that many taxpayers never reach.
Above-the-Line Adjustments (Schedule 1, Part II)
Above-the-line adjustments are the specific deductions in Part II of Schedule 1 that reduce gross income to reach AGI. They total on Schedule 1 line 26, which carries to Form 1040 line 10. Every taxpayer can claim the ones they qualify for, standard-deduction filers included, which is what separates them from itemized deductions.
The most common adjustments for the 2025 tax year:
| Adjustment | 2025 limit or rule | Schedule 1 line (approx.) |
|---|---|---|
| Educator expenses | Up to $300 per eligible educator ($600 if both spouses are educators filing jointly) | 11 |
| Health savings account (HSA) deduction | Up to the annual HSA contribution limit; requires Form 8889 | 13 |
| Deductible part of self-employment tax | One-half of SE tax; requires Schedule SE | 15 |
| Self-employed retirement plans (SEP, SIMPLE, solo 401(k)) | Plan-specific limits | 16 |
| Self-employed health insurance deduction | Premiums paid, up to net SE income | 17 |
| IRA deduction (traditional) | Up to the annual contribution limit, subject to MAGI phase-outs if covered by a workplace plan | 20 |
| Student loan interest deduction | Up to $2,500; phases out at $85,000 MAGI single ($170,000 joint) for 2025, gone at $100,000 ($200,000 joint) | 21 |
| Alimony paid | Only for divorce or separation agreements executed before 2019 | 19a |
| Moving expenses | Active-duty Armed Forces only, on Form 3903 | 14 |
The list is closed. If a deduction is not authorized as an adjustment to income by statute, it cannot reduce AGI, no matter how legitimate the expense. That is why business owners often route costs through Schedule C or a pass-through return, where they reduce the income that flows into gross income in the first place. Owners of pass-through businesses should also note that the Section 199A qualified business income deduction is a separate 20% deduction taken after AGI, not an above-the-line adjustment. For the return-level view of these lines, see our guide to the evolution of Form 1040.
A note for 2025 filers: the new Schedule 1-A deductions created by the One Big Beautiful Bill Act (no tax on tips up to $25,000, overtime up to $12,500 single, car loan interest up to $10,000, and the enhanced senior deduction up to $6,000) are below-the-line. They reduce taxable income but do not reduce AGI, so they will not help you clear an AGI or MAGI threshold.
Where AGI Sits on Form 1040
On the 2025 Form 1040, AGI is line 11. The IRS builds it in three moves: total income on line 9, total adjustments from Schedule 1 line 26 on line 10, then line 9 minus line 10 equals AGI on line 11. From there, line 12 takes your deduction and line 15 is taxable income.
The placement is deliberate. Everything above line 11 is income and adjustments; everything below is deductions, tax, and credits. Because AGI sits at that hinge, it is the number the IRS reuses to test eligibility for downstream benefits rather than recomputing income each time.
AGI drives real thresholds. Examples for recent tax years include the 7.5% floor on the medical expense itemized deduction (only costs above 7.5% of AGI count), eligibility ranges for education credits and the saver’s credit, and income limits for the Earned Income Tax Credit. Many of the phase-outs catalogued in our federal tax credits database key off AGI or a MAGI variant. Verify your prior-year AGI on line 11 of last year’s return, since the IRS uses it to authenticate e-filed returns.
AGI vs. MAGI (Modified Adjusted Gross Income)
Modified adjusted gross income (MAGI) is your AGI with certain deductions and excluded income added back. There is no single MAGI. Congress wrote a different MAGI definition for each tax benefit, so the MAGI for a Roth IRA is not the same calculation as the MAGI for the Premium Tax Credit or Medicare premiums. MAGI is always equal to or greater than AGI.
MAGI does not appear on Form 1040. It is computed on IRS worksheets tied to the specific provision you are testing. Because add-backs differ by rule, you may have several different MAGI figures in the same tax year.
Common add-backs, depending on the provision, include the student loan interest deduction, the foreign earned income exclusion, tax-exempt interest, and excluded Social Security benefits. The table below shows which benefits key off MAGI:
| Benefit | What MAGI decides | Typical add-backs to AGI |
|---|---|---|
| Roth IRA contribution | Whether you can contribute, and how much | Roth exclusions; certain deductions |
| Traditional IRA deduction | Whether contributions are deductible (if covered by a workplace plan) | Student loan interest, foreign earned income exclusion |
| Premium Tax Credit (ACA) | Marketplace subsidy amount | Tax-exempt interest, excluded foreign income, nontaxable Social Security |
| Net Investment Income Tax (3.8%) | Whether the surtax applies | Foreign earned income exclusion |
| IRMAA (Medicare Part B/D surcharge) | Premium tier | Tax-exempt interest |
For most people with only wage income and no foreign income or tax-exempt interest, MAGI equals AGI. The gap appears when you hold municipal bonds, exclude foreign earnings, or claim the specific deductions a given rule adds back.
Example Calculation
The table below walks a married-filing-jointly household from gross income to AGI, then to taxable income, using 2025 figures. It shows how above-the-line adjustments cut AGI while the standard deduction and Schedule 1-A deductions come later and do not touch AGI.
| Step | Item | Amount |
|---|---|---|
| 1 | Wages (both spouses) | $132,000 |
| 2 | Interest and dividends | $3,500 |
| 3 | Net self-employment income (one spouse) | $18,000 |
| Total (gross) income, line 9 | $153,500 | |
| 4 | Less: deductible half of self-employment tax | ($1,272) |
| 5 | Less: HSA contribution deduction | ($4,300) |
| 6 | Less: traditional IRA deduction | ($7,000) |
| 7 | Less: student loan interest | ($2,000) |
| Total adjustments, line 10 (Schedule 1 line 26) | ($14,572) | |
| 8 | Adjusted gross income, line 11 | $138,928 |
| 9 | Less: 2025 standard deduction (MFJ) | ($31,500) |
| Taxable income, line 15 | $107,428 |
The $14,572 of adjustments lowered AGI directly, which can also help this household stay under MAGI phase-outs for other benefits. The standard deduction at step 9 reduces taxable income but has no effect on the line 11 AGI. Figures are illustrative; SE tax and contribution limits vary with actual earnings and plan type.
Frequently Asked Questions
Where do I find my AGI from last year?
Your prior-year AGI is on line 11 of last year’s Form 1040. You can also retrieve it through your IRS Online Account or by requesting a tax return transcript. The IRS uses this number to verify your identity when you e-file, so an incorrect prior-year AGI is a common cause of e-file rejection.
Is AGI the same as taxable income?
No. AGI comes first and is generally larger. Taxable income is AGI minus your standard or itemized deduction, and for 2025 through 2028 minus any Schedule 1-A deductions. Tax is calculated on taxable income, not AGI, but many credits and phase-outs are tested against AGI or MAGI rather than taxable income.
Does the standard deduction reduce my AGI?
No. The standard deduction is applied after AGI, on line 12 of Form 1040, to move from AGI to taxable income. Only above-the-line adjustments on Schedule 1 Part II reduce AGI. This is why contributing to an HSA or traditional IRA can lower AGI while the standard deduction cannot.
How can I lower my AGI?
You can lower AGI by claiming eligible above-the-line adjustments: contributing to a traditional IRA or HSA, deducting self-employed health insurance and half of self-employment tax, or deducting student loan interest within the limits. Because the adjustment list is fixed by statute, only these authorized items reduce AGI; general personal expenses do not.
Why does AGI matter if tax is based on taxable income?
AGI is the reference figure for eligibility across the tax code. It sets the 7.5% floor on medical expense deductions and, through MAGI variants, controls Roth IRA limits, IRA deductibility, the Premium Tax Credit, the 3.8% Net Investment Income Tax, and Medicare IRMAA surcharges. A small change in AGI can move you across one of these thresholds.
Is MAGI ever lower than AGI?
No. MAGI starts with AGI and adds back certain items, so it is always equal to or greater than AGI, never lower. If you have no add-back items, such as tax-exempt interest or a foreign earned income exclusion, your MAGI for a given rule will equal your AGI.
Reviewed by The Ledgerism Editorial Team. Last reviewed: July 2026.