Definition: Adjusted Gross Income (AGI) is income from taxable sources (gross income) less tax deductions that are allowable even if you do not itemize deductions on your tax return.
Taxable income can include salaries or other employment income, interest and dividends, and long- and short-term capital gains and losses.
The adjustments include certain IRA deductions, moving expenses, and unreimbursed business expenses. Here is a full list of Above-the-Line Deductions.
You can figure your AGI on the first page of your federal tax return. Adjusted Gross Income serves as the basis for figuring income tax you owe.
Also Known As: AGI
Examples: After moving to a new state to teach fifth grade last year, I deducted moving expenses as well as the cost of supplies I bought for the classroom from my total income. Using these deductions, I lowered my AGI, which resulted in a tax refund for me.
