Adjusted Gross Income (AGI) is a term used in the United States income tax system to calculate taxable income. It is an individuals total gross income minus specific deductions. AGI is more relevant than gross income for most individual tax purposes. Several deductions, such as medical expenses and miscellaneous itemized deductions, are limited based on a percentage of AGI. Certain phase-outs, including those of lower tax rates and itemized deductions, are based on levels of AGI. Many states base state income tax on AGI with certain deductions.

AGI is calculated by subtracting above-the-line deductions from gross income. Gross income includes wages, dividends, capital gains, and other forms of income. Some common examples of deductions that reduce AGI include deductible traditional IRA contributions, health savings account contributions, and educator expenses.

AGI is important because it is used to calculate taxes and determine eligibility for certain tax credits and deductions to help lower overall tax bills. Modified Adjusted Gross Income (MAGI) is another term that is used to determine eligibility for certain deductions, credits, and retirement plans. MAGI is calculated by adding certain adjustments back to AGI.

AGI is reported on line 11 of Form 1040. It is often the starting point for calculating tax bills and is the basis on which individuals might qualify for many deductions and credits.