Adjusted Gross Income (AGI)
TaxGlossary term
Definition
Your gross income minus specific adjustments such as student loan interest, IRA contributions, and self-employment tax. AGI is a key figure on your tax return that determines eligibility for many deductions, credits, and retirement contribution limits.
Related terms
- Gross IncomeTotal income earned before taxes and deductions. For individuals, it includes wages, tips, investment income, and other earnings.
- Tax DeductionAn expense that can be subtracted from gross income to reduce taxable income. Common deductions include mortgage interest, student loan interest, and charitable contributions.
- Effective Tax RateThe average rate at which your total income is taxed, calculated by dividing total tax paid by total taxable income. It is always lower than your marginal tax rate because the US uses a progressive tax system.
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