What Is Adjusted Gross Income (AGI)?

Adjusted gross income is your gross income minus certain payments you’ve made during the year.

Tina Orem, Ramona PadenNovember 26, 2020
What Is Adjusted Gross Income (AGI)?

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Adjusted gross income (AGI) is your gross income — which includes wages, dividends, alimony, capital gains, business income, retirement distributions and other income — minus certain payments you’ve made during the year, such as student loan interest or contributions to a traditional individual retirement account or a health savings account.

What is my adjusted gross income?

You can find your adjusted gross income right on your IRS Form 1040.

  • On your 2019 federal tax return, your AGI is on line 8b of your Form 1040. On the 2018 Form 1040, your AGI appears on line 7.

  • Your 2019 tax return could give you an estimate of where you might be in 2020.

How does adjusted gross income affect me?

Your AGI is often the starting point for calculating your tax bill. From there, you’ll make various adjustments and subtract your allowable deductions to find the amount on which you’ll pay tax: That's your taxable income. You’ll see the term “adjusted gross income (AGI)” repeated throughout your tax forms.

AGI is the basis on which you might qualify for many deductions and credits. For example, you may be able to deduct unreimbursed medical expenses, but only when they're more than 7.5% of your AGI. So the lower your AGI, the greater the deduction.

Your state tax return might use your federal AGI as a starting point. If you file taxes online, your software will calculate your AGI.

What is Modified AGI, or MAGI?

If you’re filing Form 1040 and itemizing so that you can take certain deductions, you may also have to calculate your MAGI. It too can be a baseline for determining the phaseout level of some credits and tax-saving strategies, and the formula for MAGI can depend on the type of tax benefit it applies to.

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