What is Adjusted Gross Income (AGI)?
Definition Adjusted gross income is gross income minus specific adjustments known as above-the-line deductions, such as deductible IRA and HSA contributions, the deductible half of self-employment tax, and student loan interest. Above-the-line deductions are valuable because you can take them whether or not you itemize. AGI is a key subtotal that determines eligibility for many credits and deductions.
Many tax benefits phase out based on AGI, so strategies that lower it can unlock credits and deductions a client would otherwise lose.