Adjusted Gross Income

AGI is a key figure on a US federal tax return. It starts with all taxable income, such as wages, interest, dividends, business profits and capital gains, and then subtracts a defined list of adjustments, such as certain retirement contributions, student loan interest and contributions to health savings accounts.

For example, someone with gross income of 80,000 who makes 6,000 of deductible retirement contributions and has 2,000 of other qualifying adjustments has an AGI of 72,000.

AGI matters because many other tax rules depend on it. It is the starting point for calculating taxable income, after the standard or itemized deductions are subtracted. Eligibility for many credits and deductions, and the ability to contribute to some retirement accounts, shrink or disappear as AGI rises.

Other countries use different terms for similar ideas, such as total income or net income before allowances. The details of what counts as an adjustment are specific to US law and change over time.