Calculate your Adjusted Gross Income by subtracting above-the-line deductions from total income.
AGI is the most important single number on a federal return, but it's not the number you pay tax on. Standard or itemized deductions come after it; QBI comes after that; tax brackets only kick in once taxable income is fixed. Yet AGI controls roughly thirty separate phase-outs — from Roth eligibility to Medicare IRMAA — which is why intelligent tax planning is overwhelmingly AGI planning.
IRC §62 defines AGI as gross income minus a closed list of above-the-line deductions. Gross income (§61) is "all income from whatever source derived" — wages, interest, dividends, business income, capital gains, rents, royalties, alimony from pre-2019 divorces, unemployment compensation, etc. Above-the-line adjustments are the only deductions a non-itemizer can take. Everything else — mortgage interest, charitable giving, state and local taxes — lives below the line and requires itemizing.
Wages + Interest + Dividends + Cap Gains + Self-Employment + Other
= Gross Income
− IRA / HSA / Student Loan Interest / ½ SE Tax / SE Health / Educator / Etc.
= AGI (Line 11)
− Standard Deduction OR Itemized Deductions
− QBI Deduction (if applicable)
= Taxable Income
× Marginal Brackets = Federal Income Tax
| Adjustment | 2024 | 2025 |
|---|---|---|
| Traditional IRA (under 50) | $7,000 | $7,000 |
| Traditional IRA (50+) | $8,000 | $8,000 |
| HSA — individual coverage | $4,150 | $4,300 |
| HSA — family coverage | $8,300 | $8,550 |
| Student loan interest (max) | $2,500 | $2,500 |
| Educator expenses | $300 | $300 |
| SEP-IRA / solo 401(k) employer share | $69,000 | $70,000 |
Almost every phase-out above is technically expressed in MAGI, not AGI. The difference is small for most filers — typically student loan interest deduction add-back and tax-exempt bond interest. But for filers with foreign earned income exclusion, large tax-exempt bond holdings, or excluded U.S. savings bond interest, MAGI can be materially higher than AGI. Always read the specific provision; "AGI" in casual conversation almost always means "MAGI" for purposes of a phase-out.
Form 1040 line 11 for 2024 returns. Schedule 1 captures additional income items and the above-the-line adjustments that flow into line 10.
No — Roth contributions are made with after-tax dollars and create no current-year deduction. They reduce future taxable distributions, not current AGI.
No — pre-tax 401(k) deferrals never appear in W-2 Box 1 wages. They're excluded at the source, so they're already netted out of gross income.
Yes — fully taxable federally (some states exempt it). The 2020 partial exclusion was a one-time COVID-era item that has not been re-enacted.
QBI is computed after AGI but uses taxable income (after standard or itemized deductions) for the phase-in thresholds. For 2024: single $191,950 / MFJ $383,900 phase-in begins.
Last year's Form 1040 line 11, or your tax-transcript "Adjusted Gross Income" line. The IRS uses prior-year AGI as one identity-verification check during e-file.
Educational only; not tax advice. Reviewed by Marcus Tan, CPA, on March 1, 2026.