Adjusted gross income (AGI)
Adjusted gross income is gross income minus the adjustments allowed on Schedule 1, such as educator expenses, HSA contributions and half of self-employment tax. Many credits and deductions phase out based on AGI.
AGI comes before the standard or itemized deductions and the QBI deduction. Modified AGI adds back certain items, and each provision defines its own version.
Example. Theo earns $62,000 of wages and contributes $3,000 to his HSA outside payroll, so his AGI is $59,000.
By Binod Raj Singh, CPA (licensed in Montana) · Updated for the 2026-2027 exam windows · Last updated 2026-11-05