Adjusted Gross Income (AGI)

Your adjusted gross income, or AGI, is your gross income minus certain adjustments. This number is used by the IRS to calculate your taxable income. It can also determine your eligibility for deductions and credits.

You compute adjusted gross income by subtracting certain payments you've made during the year, like student loan interest or contributions to an IRA or health savings account. Amounts you pay include wages, dividends, alimony, capital gains, business income, retirement distributions, and other income.

Tax bills are calculated using your adjusted gross income. In order to figure out how much you will be paying taxes on, you'll need to make various adjustments and subtract your allowable deductions. Throughout your tax forms, you'll see the term "adjusted gross income (AGI)".

The adjusted gross income is found on your IRS Form 1040. Form 1040, line 11, contains your AGI.