Adjusted Gross Income (AGI) is a crucial figure on your U.S. federal tax return. It represents your Gross Income minus specific "above-the-line" deductions. These deductions are subtracted from your total income before reaching your AGI, effectively reducing the amount of income that is subject to taxation. AGI is a vital number because it's used to determine your eligibility for certain tax credits and deductions, and it influences the calculation of your final tax liability.
What is Gross Income?
Gross Income includes most sources of income you receive, such as:
Wages, salaries, tips, and other employee compensation
Interest and dividends
Business income or loss
Capital gains or losses
Retirement plan distributions
Rental property income or loss
Unemployment compensation
Alimony received (for divorce/separation agreements executed before January 1, 2019)
Common "Above-the-Line" Deductions
The calculator above includes some of the most common deductions that reduce Gross Income to AGI. These typically include:
IRA Contributions: Contributions to a traditional IRA may be deductible, depending on your income and whether you are covered by a retirement plan at work.
Student Loan Interest Paid: You can deduct the interest you paid on qualified student loans, up to a certain limit.
Deductible Part of Self-Employment Tax: If you are self-employed, you can deduct one-half of your self-employment taxes (Social Security and Medicare taxes).
Alimony Paid: For divorce or separation agreements executed before January 1, 2019, alimony payments are deductible by the payer and taxable to the recipient.
Health Savings Account (HSA) Contributions: Contributions you make to an HSA are deductible.
Self-Employed Health Insurance Premiums: If you are self-employed and pay for your own health insurance, you may be able to deduct these premiums.
There are other potential above-the-line deductions, such as educator expenses, moving expenses (for military personnel), and certain business expenses. For a complete list, consult IRS Publication 17, Your Federal Income Tax, or speak with a tax professional.
The Calculation
The basic formula for calculating AGI is:
Adjusted Gross Income (AGI) = Gross Income - Above-the-Line Deductions
Our calculator simplifies this by allowing you to input your Gross Income and then subtract various common above-the-line deductions to arrive at your estimated AGI.
Why AGI Matters
Your AGI is a critical number that impacts several aspects of your tax situation:
Tax Brackets: While AGI itself doesn't determine your tax bracket, your taxable income (which is calculated after further deductions from AGI) does.
Eligibility for Credits: Many tax credits, such as the Earned Income Tax Credit (EITC) and education credits, have AGI limitations. A lower AGI might make you eligible for these valuable credits.
Itemized Deductions: Certain itemized deductions, like medical expenses and casualty losses, are limited to a percentage of your AGI.
It's important to accurately calculate your AGI to ensure you are taking advantage of all eligible deductions and credits and to get an accurate picture of your tax liability.
function calculateAGI() {
var grossIncome = parseFloat(document.getElementById("grossIncome").value);
var iraContributions = parseFloat(document.getElementById("iraContributions").value);
var studentLoanInterest = parseFloat(document.getElementById("studentLoanInterest").value);
var selfEmploymentTaxDeduction = parseFloat(document.getElementById("selfEmploymentTaxDeduction").value);
var alimonyPaid = parseFloat(document.getElementById("alimonyPaid").value);
var healthSavingsAccount = parseFloat(document.getElementById("healthSavingsAccount").value);
var selfEmploymentHealthInsurance = parseFloat(document.getElementById("selfEmploymentHealthInsurance").value);
var agi = grossIncome;
// Check if inputs are valid numbers before subtracting
if (!isNaN(iraContributions) && iraContributions > 0) {
agi -= iraContributions;
}
if (!isNaN(studentLoanInterest) && studentLoanInterest > 0) {
agi -= studentLoanInterest;
}
if (!isNaN(selfEmploymentTaxDeduction) && selfEmploymentTaxDeduction > 0) {
agi -= selfEmploymentTaxDeduction;
}
if (!isNaN(alimonyPaid) && alimonyPaid > 0) {
agi -= alimonyPaid;
}
if (!isNaN(healthSavingsAccount) && healthSavingsAccount > 0) {
agi -= healthSavingsAccount;
}
if (!isNaN(selfEmploymentHealthInsurance) && selfEmploymentHealthInsurance > 0) {
agi -= selfEmploymentHealthInsurance;
}
// Ensure AGI doesn't go below zero
if (agi < 0) {
agi = 0;
}
document.getElementById("result-value").innerText = "$" + agi.toFixed(2);
}