Glossary
Adjusted gross income
Also called AGI
Definition
Adjusted gross income (AGI) is total income minus above-the-line adjustments such as deductible IRA and HSA contributions, half of self-employment tax and student loan interest. Many limits, phase-outs and floors are measured against AGI or a modified version of it.
How adjusted gross income works
AGI appears on Form 1040 before deductions. It controls eligibility for many credits and deductions and the floor on charitable deductions from 2026: 0.5% of AGI2026 · IRS.
Lowering AGI can have effects well beyond the bracket rate.
Why it matters to a firm
AGI-sensitive thresholds are where planning finds hidden value.
| 2026 figure | Source |
|---|---|
| Floor on itemized charitable deductions: 0.5% of AGI | IRS, effective 2026 |
Calculators that use adjusted gross income
Questions about adjusted gross income
What's MAGI?
Modified AGI, AGI with certain items added back for specific rules.
Does a traditional 401(k) reduce AGI?
Yes, through lower W-2 wages.
Why does AGI matter?
Many credits, deductions and surcharges depend on it.
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Related terms: Taxable income · Itemized deductions
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