How to Calculate AGI
AGI = Total income − Adjustments to income
Total income includes wages from Form W-2 box 1, interest, dividends, business profit, capital gains, rental income, unemployment and taxable retirement income.
Adjustments (Schedule 1, Part II) include:
- Traditional IRA contributions, within the income limits.
- Student loan interest, up to $2,500.
- HSA contributions made outside payroll.
- Half of self-employment tax.
- Educator expenses, up to $300.
- Alimony paid under divorce agreements before 2019.
AGI From a Pay Stub
A pay stub estimates AGI from gross pay minus pre-tax deductions. Traditional 401(k), pre-tax health premiums, HSA and FSA payroll contributions are already left out of W-2 box 1, so they are not subtracted again.
AGI vs MAGI vs Taxable Income
- AGI = total income − adjustments.
- MAGI = AGI + certain items added back, such as excluded foreign income and the student loan interest deduction. Each credit defines its own MAGI.
- Taxable income = AGI − standard or itemized deduction. AGI of $60,700 leaves $44,600 of taxable income for a single filer.
The Federal Income Tax Calculator takes taxable income to the tax owed.
AGI Example From a Year End Paystub
To get AGI from a final paystub of the year, start from year-to-date gross pay and take off the pre-tax deductions. What is left matches W-2 box 1, the first line of total income.
A worker with $70,000 of gross pay, $3,500 of traditional 401(k) deferrals and $2,400 of pre-tax health premiums has box 1 wages of $64,100. With no other income or adjustments, the AGI is $64,100 and taxable income for a single filer is $48,000.
A Roth 401(k) does not lower box 1, so it does not lower AGI. The 401(k) Paycheck Calculator compares the two.
AGI and the Standard Deduction
The standard deduction comes after AGI, not before it: it turns AGI into taxable income. So the same AGI leaves different taxable income for each filing status.
| AGI of $60,700 | Standard deduction | Taxable income | Federal income tax |
|---|---|---|---|
| Single | $16,100 | $44,600 | $5,104 |
| Married filing jointly | $32,200 | $28,500 | $2,924 |
| Head of household | $24,150 | $36,550 | $4,032 |
Itemized deductions, when larger than the standard deduction, also come off AGI. Many of them are limited by AGI itself.
AGI With Student Loan Interest
Student loan interest lowers AGI by the interest you paid, up to $2,500 a year, even if you take the standard deduction. Your lender reports the interest on Form 1098-E.
A borrower with $65,000 of wages who paid $3,200 of interest can deduct only $2,500, for an AGI of $62,500. The deduction phases out at higher incomes and is not allowed on a married filing separately return; the calculator does not apply the phase-out, so check the Form 1040 instructions if your income is high.
AGI for Self Employed Workers
Self-employed workers subtract half of their self-employment tax from total income to reach AGI, which wage earners cannot do.
A sole proprietor with $60,000 of net profit owes $8,477.73 of self-employment tax, and half of it, $4,238.87, is an adjustment. Entering the profit as other income and that half in the calculator gives an AGI of $55,761.13.
Other adjustments open to the self-employed include self-employed health insurance premiums and contributions to a SEP, SIMPLE or solo 401(k) plan; add them in "Other adjustments". The Self Employment Tax Calculator works out the tax itself.
Where to Find Your AGI
Your AGI is on line 11 of Form 1040. Tax software and the IRS online account also show it for past years.
You need last year's AGI to sign an e-filed return, because the IRS uses it to confirm your identity. Lenders, colleges and aid programs often ask for it too. The paystub or W-2 alone does not show AGI when you have other income or adjustments.
What Your AGI Decides
AGI is the yardstick for many tax benefits, so lowering it can help more than the tax on the dollars removed.
- Medical expenses: only costs above 7.5% of AGI are deductible. At an AGI of $60,700 the floor is $4,552.50.
- Charitable cash gifts: the deduction is capped at 60% of AGI for most public charities.
- IRA deduction and Roth IRA contributions: both phase out by modified AGI.
- Credits: the Child Tax Credit, education credits and the Premium Tax Credit all test a version of AGI.
The Child Tax Credit Calculator takes your modified AGI to the credit.
Frequently Asked Questions
How do you calculate AGI?
You calculate AGI by adding all taxable income and subtracting adjustments to income such as IRA contributions, student loan interest and half of self-employment tax.
How do you calculate MAGI from AGI?
You calculate MAGI by adding back the items a credit or deduction names to AGI, such as the foreign earned income exclusion. For most wage earners MAGI equals AGI.
Does AGI include spouse income?
Yes, on a joint return. Married couples filing jointly report one AGI that includes both spouses' income.
What is adjusted gross income?
Adjusted gross income is your total taxable income minus the adjustments on Schedule 1. It sits on line 11 of Form 1040, before the standard or itemized deduction.
Is AGI before or after taxes?
AGI is before taxes. It is the income that federal tax is figured from, once the standard or itemized deduction is subtracted.
Does a 401(k) contribution lower AGI?
Yes, a traditional 401(k) does. Pre-tax deferrals are left out of W-2 box 1, so they never enter AGI. Roth 401(k) contributions do not lower it.
Is AGI the same as gross income?
No. Gross income is all taxable income before any adjustments; AGI is what remains after the adjustments. With no adjustments the two are equal.
Where do I find last year's AGI?
Last year's AGI is on line 11 of that year's Form 1040. You can also see it in your IRS online account or tax transcript.