What is Adjusted Gross Income (AGI)?

Adjusted gross income (AGI) is your total income for the year minus a specific set of deductions the IRS calls adjustments to income. It appears on line 11a of the 2025 Form 1040 and is the number a great many tax rules key off.

AGI sits between gross income and taxable income, and that position matters: lowering AGI can qualify you for benefits that lowering taxable income cannot.

How to Calculate Adjusted Gross Income

AGI = Gross Income - Adjustments to Income

Gross income covers wages, self-employment income, interest, dividends, capital gains, rental income, taxable retirement distributions, and the taxable portion of Social Security.

Adjustments, sometimes called above-the-line deductions, are reported on Schedule 1 and subtracted whether or not you itemize. They include:

• Deductible traditional IRA contributions
• Health Savings Account (HSA) contributions made outside payroll
• Student loan interest, up to $2,500
• One half of self-employment tax
• SEP, SIMPLE, and solo 401(k) contributions for the self-employed
• Educator classroom expenses
• Alimony paid under divorce agreements finalized before 2019

Adjusted Gross Income Example

Say a single filer has the following for 2026:

Taxable income comes next. Subtracting the 2026 standard deduction for a single filer ($16,100) leaves $54,900 of taxable income, assuming no other deductions.

What Doesn’t Reduce AGI

Pre-tax 401(k) and 403(b) contributions are not adjustments. They never appear in your gross income to begin with, since your employer excludes them from Box 1 of your W-2. They lower AGI through that exclusion, which is why you won’t find them on Schedule 1.

The standard or itemized deduction doesn’t touch AGI either. Neither do the deductions added by the One Big Beautiful Bill Act (OBBBA) for qualified tips, qualified overtime pay, car loan interest, and taxpayers 65 and older. Those are claimed on Schedule 1-A and subtracted on line 13b of the 2025 Form 1040, after AGI, so they reduce taxable income but leave AGI and the thresholds tied to it unchanged.

Adjusted Gross Income on Your W-2

Your W-2 has no AGI box, because AGI depends on income and adjustments your employer doesn’t see. Box 1 (wages, tips, other compensation) is the closest starting figure. It already excludes pre-tax 401(k) and 403(b) deferrals, so it’s often lower than your salary. Boxes 3 and 5 (Social Security and Medicare wages) add those deferrals back, so they can be higher than Box 1 and aren’t the right starting point.

To get from Box 1 to AGI, add any other income (interest, dividends, capital gains, side-business profit), then subtract adjustments such as deductible IRA contributions or HSA contributions made outside payroll.

AGI vs. Taxable Income vs. Gross Income

AGI is not your taxable income. Taxable income comes later, after you subtract the standard or itemized deduction and a few other deductions taken below the AGI line.

Where to Find Your AGI on Form 1040

Your AGI is on line 11a of the 2025 Form 1040, labeled “This is your adjusted gross income.” On the 2024 form it was line 11.

You also need last year’s AGI to verify your identity when you e-file, though tax software often fills it in for returning users. If you don’t have last year’s return, you can see your AGI in the records section of your IRS Individual Online Account or request a tax return transcript.

What Your AGI Affects

AGI, or a modified version of it, controls eligibility for a long list of tax benefits. Some of these phase out gradually; others are cliffs, and the Medicare income-related monthly adjustment amount (IRMAA) in particular can cost about $1,150 to $1,740 a year per person for crossing most tier thresholds by a dollar.

AGI vs. MAGI

Modified adjusted gross income (MAGI) is AGI with certain items added back. MAGI is not one number, because each provision defines it slightly differently.

For Roth IRA eligibility, MAGI is figured before any deductible IRA contribution and adds back the student loan interest deduction, but excludes Roth conversion income. For ACA subsidies, it adds back tax-exempt interest, untaxed Social Security, and the foreign earned income exclusion. For IRMAA, it is AGI plus tax-exempt interest.

With straightforward finances, MAGI and AGI are often the same or nearly so. They diverge when you have municipal bond interest, foreign income, significant untaxed Social Security, a Roth conversion, or a deductible IRA contribution.

How to Lower Your AGI

Adjustments are a fixed statutory list, so the levers are limited.

Contributing to a traditional 401(k) or 403(b) keeps income out of Box 1 entirely. HSA contributions reduce AGI, and unlike other adjustments, the money then grows tax-free and comes out tax-free for qualified medical expenses. For the self-employed, a SEP or solo 401(k) can shelter a large share of business income.

Timing matters at the margins. Deferring a bonus, harvesting capital losses to offset gains, or shifting a Roth conversion into a lower-income year all move AGI. With ProjectionLab’s Optimize tool, you can cap Roth conversions below an IRMAA cliff or an ACA income limit.

If you’ve retired but haven’t claimed Social Security yet, you have more control than usual, since you choose which accounts to draw from and therefore how much taxable income to recognize in any given year.

Frequently Asked Questions

Do 401(k) contributions reduce AGI?Pre-tax contributions do, indirectly; Roth 401(k) contributions don’t. Pre-tax contributions are excluded from the wages reported on your W-2, so they never enter gross income. They are not listed as an adjustment because they were never counted.

Is MAGI the same as AGI? Usually close, rarely identical. MAGI adds back specific items and is defined differently for each provision that uses it. Check the definition for the specific benefit you are evaluating.

Does AGI include Social Security benefits? Only the taxable portion, which is zero to 85% of benefits depending on your other income. The untaxed portion stays out of AGI but is added back for some MAGI calculations, including ACA subsidies.