what is adjusted gross income agi 
adjusted gross income agi is the number that the internal revenue service irs uses to determine your income taxes owed for the year the number is your total taxable income for the year minus certain adjustments that you may qualify for adjustments are made for business expenses student loan interest payments and contributions to retirement accounts for example these are subtracted from gross income to arrive at adjusted gross income a different number modified agi magi is used to determine a taxpayer s eligibility for specific programs and retirement accounts investopedia jiaqi zhouunderstanding adjusted gross income agi gross income is the sum of all the money you earn in a year which may include wages dividends capital gains interest income royalties rental income and retirement distributions before tax or deductions agi makes certain adjustments to your gross income to reach the figure on which your tax liability will be calculated 4many u s states also use the agi number from federal returns to calculate how much individuals owe in state income taxes states may modify this number further with state specific deductions and credits agi is an important figure because it determines your eligibility for certain deductions and tax credits the items subtracted from your gross income to calculate your agi are referred to as adjustments to income and you report them on schedule 1 when you file your annual tax return 5 some of the most common adjustments include 