Glossary
Adjusted Gross Income (AGI)
Adjusted gross income (AGI) is a taxpayer's total income minus specific deductions allowed by the tax code, and it is the figure many tax rules and eligibility limits are measured against.
AGI starts with wages, interest, dividends, capital gains, business income and other income, then subtracts adjustments such as certain retirement contributions and HSA contributions. It appears on the front of Form 1040 and feeds into taxable income after deductions.
Why it matters in practice
Many retirement and tax thresholds key off AGI or modified AGI: Roth IRA contribution eligibility, traditional IRA deductibility, certain credits, and Medicare premium surcharges. Actions that lower AGI — pre-tax 401(k) deferrals, for example — can therefore have knock-on effects beyond the immediate tax saving.
Related terms: Traditional IRA · Roth IRA · HSA (Health Savings Account) · Capital Gain · Tax-Deferred