What Is My AGI on My Tax Return?

Your Adjusted Gross Income (AGI) is a foundational figure on your federal income tax return. It serves as a starting point for numerous tax calculations, playing a significant role in determining your overall tax liability. Understanding your AGI is important because it influences eligibility for various tax benefits, deductions, and credits, directly impacting your financial obligations and potential refunds.

Understanding Adjusted Gross Income

Adjusted Gross Income (AGI) is calculated by taking your total income from all sources and subtracting specific allowable deductions. The Internal Revenue Service (IRS) defines AGI as your gross income minus certain adjustments, which are often referred to as “above-the-line” deductions.

Gross income encompasses all income you receive that is not specifically excluded by law. This includes common sources such as wages, salaries, tips, and bonuses from employment. It also covers investment income like interest from savings accounts, dividends from stocks, and capital gains from the sale of assets. For individuals who are self-employed or have other ventures, business income, rental income, and royalties are also part of their gross income. Retirement distributions, such as those from pensions or annuities, contribute to gross income as well.

To arrive at AGI from gross income, certain deductions are subtracted. These “above-the-line” deductions are valuable because they reduce your income before your standard or itemized deductions are considered. Common adjustments include contributions to a traditional Individual Retirement Account (IRA) and Health Savings Account (HSA) contributions.

Other typical above-the-line deductions include student loan interest paid, with a maximum deduction of $2,500 per year, and certain educator expenses for unreimbursed classroom costs, generally capped at $300. Half of your self-employment tax paid is also deductible, as are certain business expenses for reservists, performing artists, and fee-basis government officials.

Locating Your Adjusted Gross Income

For tax years 2020 through 2024, your AGI is reported on Line 11 of Form 1040, U.S. Individual Income Tax Return. This applies to Form 1040, Form 1040-SR (for seniors), and Form 1040-NR (for non-resident aliens). If you use tax preparation software, it automatically calculates and populates this line for you.

It is often necessary to know your AGI from previous years, particularly when e-filing your current tax return or for various applications. Your prior year’s AGI can be found on Line 11 of your previous year’s Form 1040. If you do not have a copy of your past tax returns, you can generally access this information through your IRS Online Account or by requesting a tax transcript from the IRS.

Why Adjusted Gross Income Matters

Adjusted Gross Income (AGI) is a significant figure. It acts as a threshold for determining eligibility for numerous tax credits and deductions, directly impacting the amount of tax you may owe or the refund you might receive. A lower AGI can often lead to greater tax savings by increasing your eligibility for certain benefits.

For instance, AGI is a factor in determining eligibility for tax credits such as the Child Tax Credit and education credits. The Earned Income Tax Credit (EITC) also has AGI limits, meaning that as your income increases, the credit amount may be phased out or eliminated. Similarly, certain itemized deductions, like the medical expense deduction, are limited based on a percentage of your AGI; only expenses exceeding 7.5% of your AGI are deductible.

Beyond tax returns, AGI plays a role in other financial areas. It is used to calculate monthly payments for federal student loans under income-driven repayment (IDR) plans. A lower AGI can result in lower monthly student loan payments. Additionally, AGI is a factor in determining eligibility for Affordable Care Act (ACA) premium tax credits, which help individuals and families afford health insurance coverage purchased through the Marketplace. Medicare Part B premiums can also be affected by your AGI, with higher incomes potentially leading to higher premiums.

Distinguishing AGI from Other Income Measures

Understanding how Adjusted Gross Income (AGI) relates to other income terms on a tax return is important. Gross income, AGI, and taxable income represent distinct stages in the calculation of your final tax obligation. Each serves a specific purpose in the overall tax framework.

Gross income is the broadest measure, encompassing all income from all sources before any deductions are applied. This initial figure includes your wages, investment earnings, and business profits. It is the starting point from which all subsequent calculations derive.

Adjusted Gross Income is the next step, calculated by subtracting specific “above-the-line” deductions from your gross income. These deductions, which include items like certain IRA contributions or student loan interest, reduce your overall income before the standard or itemized deductions are considered. AGI is an intermediate figure because it determines eligibility for many tax benefits.

Finally, taxable income is the amount remaining after you subtract either the standard deduction or your itemized deductions from your AGI. This is the income figure upon which your federal income tax liability is calculated using the applicable tax brackets. The progression from gross income to AGI and then to taxable income illustrates refining your income.