How to calculate AGI
AGI takes two steps on Form 1040.
First, add up your total income: wages from box 1 of your W-2s, taxable interest, ordinary dividends, the taxable part of IRA, pension and Social Security payments, capital gains or losses, and anything reported on Schedule 1, such as business profit, rental income and unemployment benefits. On the 2025 Form 1040 that sum is line 9.
Second, subtract your adjustments to income, totaled in Part II of Schedule 1 and carried to line 10. What remains is AGI, on line 11a of the 2025 form (line 11 on earlier versions).
Some of the most effective ways to lower AGI never appear as an adjustment. Pre-tax 401(k) and 403(b) deferrals and health premiums paid through a cafeteria plan are already excluded from box 1 wages, so they reduce AGI before you start; don’t subtract them a second time. Likewise, nontaxable income such as municipal bond interest or a qualified Roth withdrawal never enters total income, although the bond interest is still reported on line 2a.
Adjustments to income for 2026
Adjustments are deductions the tax code allows “above the line,” so you get them whether you take the standard deduction or itemize. The list lives in section 62 of the tax code and on Schedule 1. Most people use only one or two, and several carry their own income limits, measured with a version of modified AGI. The most common ones for 2026 are below. Narrower ones include the penalty a bank charges when you break a CD early, alimony paid under a divorce or separation agreement signed before 2019, and moving costs for active-duty military.
- Traditional IRA contributions: up to $7,500, or $8,600 at 50 or older. If you or your spouse is covered by a workplace plan, the deduction shrinks and then disappears as income rises.
- HSA contributions made outside payroll: up to $4,400 for self-only coverage or $8,750 for family coverage, plus $1,000 at 55 or older.
- Self-employed items: the deductible half of self-employment tax, SEP, SIMPLE and solo 401(k) contributions, and self-employed health insurance.
- Student loan interest: up to $2,500, phased out between $85,000 and $100,000 of modified AGI ($175,000–$205,000 joint).
- Educator expenses: up to $350 of classroom costs for eligible K–12 teachers and other educators.
AGI vs. taxable income and modified AGI
AGI is not the number your tax brackets apply to. After AGI come the standard deduction ($16,100 single or $32,200 married filing jointly in 2026) or your itemized deductions, the qualified business income deduction and, for 2025–2028, the deductions for tips, overtime pay, car-loan interest and the $6,000 senior deduction. What is left is taxable income.
The order matters. Deductions taken after AGI lower your tax but leave AGI untouched, so they do nothing for rules measured against AGI. An extra $6,000 senior deduction won’t reduce the income Medicare uses to set IRMAA surcharges; $6,000 more of pre-tax 401(k) deferrals would.
Modified AGI works from the other direction. Each rule that uses it starts from AGI and adds items back, such as tax-exempt interest or excluded foreign income, so MAGI is usually the same as AGI or higher. Most moves that lower AGI lower MAGI too. The exceptions are deductions a rule adds back: the Roth IRA income test, for example, ignores your traditional IRA deduction.
Ways to lower AGI
Because AGI drives so many thresholds, lowering it can pay twice: once in tax, and again through a larger credit, a smaller surcharge or a deduction you would otherwise lose. The main tools either keep income out of total income or add an adjustment. In retirement, the account you draw from matters just as much: traditional IRA withdrawals add to AGI in full, while cash savings, the cost basis of taxable investments you sell and qualified Roth withdrawals add nothing.
- Pre-tax workplace deferrals: up to $24,500 in 2026, plus catch-up contributions from age 50.
- HSA contributions, through payroll or on your own, if you have a qualifying high-deductible health plan.
- A deductible traditional IRA contribution, when your income is under the phase-out or you have no workplace plan.
- From age 70½, a qualified charitable distribution sends IRA money to charity without it entering AGI.
- Timing: spreading Roth conversions and large capital gains across years, since both count in AGI in full.
- Tax-loss harvesting: net capital losses offset gains, then up to $3,000 of other income a year ($1,500 if married filing separately).
Illustrative numbers
From total income to AGI: a salaried worker with a side business (single, 2026)
- Total income
- Wages, taxable interest, dividends, taxable retirement and Social Security income, gains, business and other income (2025 Form 1040, line 9)
- Adjustments to income
- Above-the-line deductions from Part II of Schedule 1, such as deductible IRA and HSA contributions and half of self-employment tax (line 10)
Deductions taken after AGI, including the standard deduction, never change this figure.
Wages, W-2 box 1$95,000
Net profit from freelance design, Schedule C$20,000
Bank interest$1,000
Total income$116,000
Half of self-employment tax ($20,000 × 92.35% × 15.3% ÷ 2)−$1,413
HSA contribution outside payroll, self-only limit−$4,400
Adjusted gross income$110,187
Two adjustments cut AGI by $5,813 whether or not this filer itemizes. A $7,500 traditional IRA contribution would add nothing if this filer has a 401(k) at work: a covered single filer’s IRA deduction disappears above $91,000 of modified AGI in 2026.
At a glance
Where AGI shows up in the 2026 federal tax rules
| Rule | How AGI is used | Figure or example |
|---|---|---|
| Medical and dental deduction | Only costs above 7.5% of AGI count | $6,000 floor at $80,000 of AGI |
| Cash gifts to public charities | Deduction capped at 60% of AGI | $60,000 cap at $100,000 of AGI |
| Charitable floor for itemizers | Only giving above 0.5% of AGI counts | New in 2026; $500 at $100,000 of AGI |
| Saver’s Credit | Credit rate steps down, then ends, as AGI rises | Ends above $40,250 single, $80,500 joint |
| Estimated tax safe harbor | 110% of last year’s tax if last year’s AGI topped $150,000 | $75,000 if married filing separately |
| E-filing your own return | Prior-year AGI verifies your identity | Or a Self-Select PIN |
| Modified AGI tests | Start from AGI, then add or remove items | Roth IRA, IRMAA, ACA credits, NIIT |
Put it in your plan
AGI in MoneyWhatIf
MoneyWhatIf is a planning model rather than a line-by-line Form 1040, but its Taxes page shows the same sequence. The “How the year is worked out” worksheet walks from cash income, less pre-tax contributions and untaxed income, plus pre-tax withdrawals, to taxable income, and the model deducts half of self-employment tax in its ordinary-income worksheet. On Schedule A it applies income-based limits: declared medical and long-term care costs count only above 7.5% of AGI, and itemized charitable giving faces income-based floors and ceilings.
Common questions
AGI FAQs
Where do I find my AGI?
On line 11a of the 2025 Form 1040, at the bottom of page 1; earlier forms used line 11. If you e-file your own return, you usually sign it with last year’s AGI or a Self-Select PIN, so keep a copy. If you’ve lost it, your IRS Online Account can show it, or you can request a transcript or a copy of last year’s return.
Does a 401(k) contribution lower my AGI?
Yes, if it is pre-tax. Traditional 401(k), 403(b) and governmental 457(b) deferrals are left out of box 1 wages, so they lower AGI without appearing on Schedule 1. The 2026 limit is $24,500, plus $8,000 from age 50 or $11,250 at ages 60–63. Roth 401(k) deferrals do not lower AGI; you pay tax on them now and take qualified withdrawals tax-free later.
Do IRA contributions lower AGI?
Only a deductible one. A traditional IRA contribution you can deduct is an adjustment on Schedule 1, so it lowers AGI; a Roth IRA contribution, or a nondeductible traditional one, does not. If you or your spouse has a workplace plan, the deduction phases out at higher incomes: for a covered single filer, between $81,000 and $91,000 of modified AGI in 2026. You can contribute for a year until its filing deadline, usually April 15, so IRA and HSA contributions are among the few ways to lower last year’s AGI after December 31.
Do Roth conversions and capital gains count in AGI?
Yes. The taxable amount of a Roth conversion is added to your IRA income, and capital gains, including long-term gains taxed at lower rates, are part of total income. A large conversion or sale therefore raises AGI and can ripple into the taxable share of Social Security, the net investment income tax and Medicare premiums two years later.
Is AGI the same as gross income?
Not quite. Gross income is everything taxable before any subtraction, and AGI is that total minus adjustments to income. For a salaried worker with no HSA, IRA deduction, student loan interest or self-employment, the two are the same number. They drift apart as soon as you have an adjustment, and both differ from gross pay, which still includes pre-tax payroll deductions.