Adjusted gross income is your gross income from all sources minus certain above-the-line adjustments such as traditional IRA contributions, HSA contributions, and student-loan interest. It sits between gross income and taxable income on your return.
AGI matters because many tax benefits phase out based on it, and your taxable income is AGI minus the standard or itemized deduction. A lower AGI can unlock credits and deductions that higher earners lose.
Related terms: Compound Interest · 401(k)