Adjusted Gross Income (AGI) Calculator
Your Adjusted Gross Income (AGI):
$0.00
Understanding Adjusted Gross Income (AGI)
Adjusted Gross Income (AGI) is a crucial figure on your tax return. It's your gross income minus specific deductions, often referred to as "above-the-line" deductions. AGI is not your final taxable income, but it serves as a foundational number from which many other tax calculations and limitations are derived.
What is Gross Income?
Gross income includes all taxable income you receive during the year. This can encompass a wide range of sources, such as:
- Wages, salaries, and tips
- Taxable interest and ordinary dividends
- Business income or loss
- Capital gains or losses
- Pensions and annuities
- Rental and royalty income
- Farm income
- Unemployment compensation
- Other income sources like gambling winnings or awards
What are "Above-the-Line" Deductions?
These are specific deductions that reduce your gross income to arrive at your AGI. They are called "above-the-line" because they are subtracted before you reach the "line" for AGI on your tax form. Common examples include:
- Educator Expenses: Up to a certain amount for unreimbursed business expenses paid by eligible educators.
- Health Savings Account (HSA) Deduction: Contributions made to an HSA.
- IRA Deduction: Contributions to a traditional IRA, subject to income limitations and other rules.
- Student Loan Interest Deduction: Interest paid on qualified student loans, up to a certain limit.
- One-Half of Self-Employment Tax: Self-employed individuals can deduct one-half of their self-employment tax.
- Alimony Paid: For divorce or separation agreements executed before 2019.
- Certain business expenses of reservists, performing artists, and fee-basis government officials.
- Penalty for early withdrawal of savings.
- Self-employed health insurance deduction.
- Self-employed SEP, SIMPLE, and qualified plans.
Why is AGI Important?
Your AGI is more than just an intermediate step; it's a critical number that impacts various aspects of your tax situation:
- Eligibility for Tax Credits: Many tax credits, such as the Child Tax Credit, Earned Income Tax Credit, and education credits, have AGI-based phase-outs.
- Deductibility of Itemized Deductions: Certain itemized deductions, like medical expenses and casualty losses, are only deductible if they exceed a percentage of your AGI.
- IRA Contribution Limits: Your ability to deduct traditional IRA contributions or contribute to a Roth IRA can be limited by your AGI.
- Medicare Premiums: Higher AGI can lead to higher Medicare Part B and Part D premiums.
- Affordable Care Act (ACA) Subsidies: Eligibility for premium tax credits to help pay for health insurance is based on AGI.
How to Use This Calculator
Enter your total gross income and any applicable above-the-line deductions into the respective fields. The calculator will then compute your estimated Adjusted Gross Income. Remember, this calculator provides an estimate and should not replace professional tax advice or official tax preparation software.
Example Calculation:
Let's say an individual has:
- Total Gross Income: $80,000
- Educator Expenses: $250
- HSA Deduction: $3,850
- IRA Deduction: $6,500
- Student Loan Interest Paid: $1,200
- Self-Employment Tax Deduction (1/2): $0 (not self-employed)
- Alimony Paid (pre-2019 divorce): $0
Total Deductions = $250 + $3,850 + $6,500 + $1,200 = $11,800
AGI = $80,000 – $11,800 = $68,200
This individual's Adjusted Gross Income would be $68,200.