Definition of adjusted gross income

Adjusted gross income, also known as (AGI), is defined as total income minus deductions, or "adjustments" to income that you are eligible to take.

  • Gross income includes wages, dividends, capital gains, business and retirement income as well as all other forms income.
    • Examples of income include tips, rents, interest, stock dividends, etc.
  • Adjustments to income are deductions that reduce total income to arrive at AGI.
    • Examples of adjustments include half of the self-employment taxes you pay; self-employed health insurance premiums; contributions to certain retirement accounts (such as a traditional IRA); student loan interest paid; educator expenses, etc.

You can find your previous AGI on your 2022 federal tax return to use as a guide. Please refer to Line 11 if you filed a Form 1040.

Your AGI is calculated before you take your standard or itemized deduction on Form 1040.

Image of Form 1040's rows 9 through 15

Important reminder: If you are using the IRS Free File Guided Tax Software and you are filing using the Married Filing Jointly filing status, the $79,000 AGI eligibility amount applies to your combined AGI.

Refer to the 1040 instructions (Schedule 1)PDF for more information on Additional Income and Adjustments to Income.


Adjusted Gross Income (AGI)=gross income–adjustments
Gross Income=Total income. Income from all sources of income.
Adjustments=Expenses the taxpayer paid for with income that the government deems should not be taxed.

Bob’s Income:

  1. $50,000 salary/wages
  2. $12,000 in rental income
  3. $8,500 wages earned as a part-time Uber driver
  4. $500 from interest from bonds

Gross Income=$71,000

Adjustments from his gross income:

  1. $250 in educator expenses
  2. $2,500 in student loan interest


Subtracting the Adjustments ($2750) from the Total Income ($71,000), Bob’s AGI is $68,250.