Adjusted gross income (AGI) is your total income from all sources for the year minus a specific set of “adjustments to income.” That is what “what is adjusted gross income” comes down to: a single number the rest of your tax return is built on. On a Form 1040, AGI appears on line 11 (Source: IRS, Modified adjusted gross income, 2025).
Adjusted gross income is total income minus above-the-line adjustments such as deductible IRA and HSA contributions and student loan interest. It sits on Form 1040, line 11, and is the starting point for your standard or itemized deduction. For 2026, the standard deduction is $32,200 for married filing jointly and $16,100 for single filers (Source: IRS Rev. Proc. 2025-32, 2025).
What is adjusted gross income?
Adjusted gross income is your gross income from all sources reduced by “adjustments to income” listed on Schedule 1, Part II of Form 1040. On the 1040, total income is line 9, adjustments are line 10, and AGI is line 11. Tax law uses AGI to decide how much income is taxable and whether you qualify for many credits and deductions (Source: IRS, Modified adjusted gross income, 2025).
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What counts as gross income?
Gross income is income from nearly every source before any adjustments are subtracted. It is the larger number that sits above AGI on your return and feeds directly into the AGI calculation on Form 1040 (Source: IRS, Form 1040 instructions, 2025). Common sources include:
- Wages, salary and tips
- Interest and dividends
- Capital gains from selling investments
- Business and self-employment income
- Rental and royalty income
- Retirement account distributions and pensions
- The taxable portion of Social Security benefits
- Unemployment compensation
- Alimony received under pre-2019 divorce agreements
A traditional-to-Roth conversion is also includible in gross income in the year of the distribution, so it raises income and therefore AGI (Source: IRS Publication 590-A, 2025).
What are the adjustments that reduce gross income to AGI?
Adjustments to income, often called “above-the-line” deductions, are subtracted from gross income to reach AGI. They are reported on Schedule 1, Part II of Form 1040, and you can claim them whether or not you itemize (Source: IRS, Form 1040 and Schedule 1 instructions, 2025). They include:
- Educator expenses
- Health savings account (HSA) deduction
- Deductible traditional IRA contributions
- Student loan interest deduction
- Self-employed SEP, SIMPLE and qualified plan contributions
- Self-employed health insurance deduction
- Deductible part of self-employment tax (one-half of SE tax)
- Penalty on early withdrawal of savings
- Moving expenses for members of the Armed Forces
- Alimony paid under pre-2019 divorce agreements
- Archer MSA deduction
What is an example of adjusted gross income?
A worked example shows how gross income becomes AGI and then taxable income. The figures below are illustrative for a single filer in 2026; the standard deduction used is the verified 2026 amount and the IRA figure is the verified 2026 limit (Source: IRS Rev. Proc. 2025-32 and Notice 2025-67, 2025).
- Add up gross income: $95,000 wages + $1,200 interest + $2,300 dividends + $4,000 capital gains + $8,000 net self-employment income = $110,500 total income.
- Subtract adjustments: $7,500 deductible traditional IRA contribution + $2,500 student loan interest + $565 one-half of self-employment tax = $10,565 in adjustments.
- Total income minus adjustments = $99,935 AGI (this is Form 1040, line 11).
- Subtract the 2026 single standard deduction of $16,100 = $83,835 taxable income.
Taxable income, not AGI, is the figure your tax brackets are applied to. AGI is the intermediate stop that gets you there.
AGI vs. gross income vs. taxable income vs. MAGI
These four terms describe different points in the same calculation, moving from the broadest income figure down to the number that is taxed, plus a set of recalculated versions used for eligibility tests. The table below compares them at a glance (Source: IRS, Form 1040 instructions and Modified adjusted gross income page, 2025).
| Term | What it is | Where it lives |
|---|---|---|
| Gross income | All income before adjustments | Feeds Form 1040, line 9 (total income) |
| Adjusted gross income (AGI) | Gross income minus Schedule 1 adjustments | Form 1040, line 11 |
| Taxable income | AGI minus the standard or itemized deduction | Form 1040, after deductions are subtracted |
| Modified AGI (MAGI) | AGI with certain items added back | Not printed on the 1040; computed on IRS worksheets |
What is MAGI, and why is it calculated differently for each purpose?
Modified adjusted gross income is your AGI with certain amounts added back, and it is always equal to or greater than your AGI. What is added back depends entirely on the tax provision being tested, so there is no single MAGI number, and MAGI does not appear directly on Form 1040 (Source: IRS, Modified adjusted gross income, 2025).
Most explainers treat MAGI as one “add-back” figure. In practice, several distinct MAGIs use different add-backs, as the table shows.
| MAGI purpose | Starts with AGI, then adds | Primary source |
|---|---|---|
| ACA premium tax credit | Tax-exempt interest, excluded foreign earned income, and nontaxable Social Security benefits | IRS Form 8962 instructions, 2025 |
| Roth IRA contribution limit | Certain deductions added back per Worksheet 2-1 (including the traditional IRA deduction) | IRS Pub 590-A, 2025 |
| Net investment income tax (NIIT) | Foreign earned income exclusion (net of related deductions) | IRS Topic 559, 2025 |
| Medicare IRMAA | Tax-exempt interest | SSA POMS HI 01101.010/.020, 2026 |
Because the add-backs differ, the same taxpayer can have one MAGI for a Roth contribution test and a different MAGI for a Medicare surcharge. Q3 Advisors covers two of these on its research pages for the net investment income tax and Medicare IRMAA brackets.
Why does your AGI matter?
AGI and its MAGI variants act as the on/off switch and the sliding scale for many credits, deductions and surcharges. As income rises, benefits phase out and surcharges phase in, which is why AGI often drives more of your tax result than the brackets alone (Source: IRS, Modified adjusted gross income, 2025).
Provisions tied to AGI or MAGI include the Child Tax Credit, the Earned Income Tax Credit (2026 maximum of $8,231 for three or more children), the Child and Dependent Care Credit, and IRA deductibility (Source: IRS Rev. Proc. 2025-32 and Notice 2025-67, 2025). For 2026, the traditional IRA deduction phases out over a MAGI range of $81,000 to $91,000 for a single filer covered by a workplace plan, and Roth IRA contributions phase out over $153,000 to $168,000 for single and head-of-household filers (Source: IRS Notice 2025-67, 2025).
Higher up the income scale, MAGI drives the 3.8% net investment income tax above fixed thresholds of $200,000 (single) and $250,000 (married filing jointly), and it sets Medicare IRMAA surcharges, which for 2026 begin above a MAGI of $109,000 for individuals and $218,000 for joint filers (Source: IRS Topic 559, 2025; SSA POMS HI 01101.020, 2026). Because a Roth conversion adds to income in the conversion year, the extra income can raise AGI and MAGI enough to affect credit eligibility or, through the two-year IRMAA look-back, future Medicare premiums, depending on circumstances. Q3 Advisors also maintains research on the Social Security tax torpedo and 2026 retirement contribution limits.
How do you find your prior-year AGI for e-filing?
Tax software and the IRS often ask for your prior-year AGI to verify your identity when you e-file. The fastest place to find it is line 11 of last year’s Form 1040. If you do not have the paper copy, you can pull it from an IRS online account or a tax return transcript (Source: IRS, Form 1040 instructions, 2025).
Two situations come up often:
- You filed last year but cannot find the return. One approach is to sign in to your IRS Individual Online Account or request a tax return transcript, both of which show the AGI reported.
- You did not file a return last year. IRS rules generally allow you to enter $0 as the prior-year AGI for identity verification when no prior return exists.
Your federal AGI and your state AGI can also differ. Many states start from federal AGI and then add or subtract state-specific items, so the AGI on your state return may not match line 11 of your federal 1040. Checking your state’s instructions can help avoid a mismatch.
Work with Q3 Advisors
Q3 Advisors is a registered investment adviser focused on retirement tax planning. This article is educational and is not advice; for guidance on your own circumstances, consult a qualified tax or financial professional.
Frequently asked questions
How do I calculate my adjusted gross income?
Add all of your income for the year (wages, interest, dividends, capital gains, business income and retirement distributions), then subtract the adjustments on Schedule 1, Part II of Form 1040, such as deductible IRA and HSA contributions, student loan interest and one-half of self-employment tax. The result is your AGI on line 11 (Source: IRS, Form 1040 instructions, 2025).
Is adjusted gross income the same as taxable income?
No. AGI comes first; taxable income comes later. You reach taxable income by subtracting either the standard deduction or your itemized deductions from AGI. For 2026, the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly, so taxable income is usually smaller than AGI (Source: IRS Rev. Proc. 2025-32, 2025).
What is an example of adjusted gross income?
Suppose a single filer has $110,500 of total income and $10,565 in adjustments (a $7,500 IRA deduction, $2,500 of student loan interest and $565 of self-employment tax deduction). Total income minus adjustments equals $99,935, which is the AGI on Form 1040, line 11. These figures are illustrative; the IRA and standard-deduction amounts reflect 2026 limits (Source: IRS Notice 2025-67 and Rev. Proc. 2025-32, 2025).
What is the difference between gross income and adjusted gross income?
Gross income is all of your income before any adjustments. Adjusted gross income is that same total after subtracting above-the-line adjustments on Schedule 1, Part II, such as deductible retirement contributions and student loan interest. AGI is therefore equal to or less than gross income and appears on Form 1040, line 11 (Source: IRS, Modified adjusted gross income, 2025).
Where do I find my AGI on my W-2 or 1040?
AGI is not on your W-2. A W-2 reports wages and withholding, not your full income picture or your adjustments. AGI is calculated on Form 1040 and printed on line 11 of the 2024 and 2025 returns, so look there rather than at any W-2 box (Source: IRS, Form 1040 instructions, 2025).
Does adjusted gross income include Social Security?
AGI includes only the taxable portion of Social Security benefits, not the full benefit. Depending on your other income, some, all, or none of your benefits may be taxable and thus flow into AGI, while any nontaxable portion stays out. For certain MAGI tests, such as the ACA premium tax credit, nontaxable Social Security benefits are added back (Source: IRS Form 8962 instructions, 2025).
How do I find my AGI from last year?
Your prior-year AGI is on line 11 of last year’s Form 1040. If you do not have the return, you can view it through an IRS Individual Online Account or request a tax return transcript. If you did not file a return last year, IRS rules generally allow you to enter $0 as your prior-year AGI for e-file identity verification (Source: IRS, Form 1040 instructions, 2025).
Is AGI before or after the standard deduction?
AGI is before the standard deduction. The standard deduction is subtracted from AGI to produce taxable income, so it comes one step later in the calculation. For 2026, subtracting the standard deduction (for example, $16,100 for a single filer) from AGI gives your taxable income, the figure your tax brackets are then applied to (Source: IRS Rev. Proc. 2025-32, 2025).
Sources
IRS, Modified adjusted gross income: https://www.irs.gov/credits-deductions/modified-adjusted-gross-income
IRS, Instructions for Form 1040 (2025): https://www.irs.gov/instructions/i1040gi
IRS, Instructions for Form 8962, Premium Tax Credit (2025): https://www.irs.gov/instructions/i8962
IRS, Topic No. 559, Net Investment Income Tax: https://www.irs.gov/taxtopics/tc559
IRS, Publication 590-A (2025): https://www.irs.gov/publications/p590a
IRS, Rev. Proc. 2025-32 (2026 inflation adjustments): https://www.irs.gov/pub/irs-drop/rp-25-32.pdf
IRS, Notice 2025-67 (2026 retirement plan limits): https://www.irs.gov/pub/irs-drop/n-25-67.pdf
SSA POMS HI 01101.020 (2026 IRMAA tiers): https://secure.ssa.gov/poms.nsf/lnx/0601101020
