Adjusted Gross Income (AGI)
Gross income minus above-the-line deductions, and the figure most other tax thresholds key off.
AGI is total income less the deductions available before the standard or itemized deduction is applied. Pre-tax retirement contributions, HSA contributions, student loan interest and deductible IRA contributions all reduce it.
It matters disproportionately because so many other rules are written against it rather than against gross income. Roth contribution eligibility, education credits, the premium tax credit and several phase-outs all reference AGI or a modified version of it, so the same salary can qualify or not depending on what was deducted above the line.
Modified AGI adds certain deductions back, and the definition differs by provision, which is a genuine complication rather than a technicality. The MAGI used for Roth eligibility is not computed identically to the one used for Medicare premium surcharges.
Worked through
Above-the-line deductions moving AGI
$155k of gross income, reduced by pre-tax retirement and HSA contributions.
- Gross income
- $155,000
- 401(k) contribution
- -$23,500
- HSA contribution
- -$4,300
- AGI
- $127,200
Two contributions moved AGI by $27,800, which is enough to cross several thresholds that gross income alone would have failed.
See your own adjusted gross income (agi)
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