adjusted gross income (AGI)

Adjusted gross income (AGI) is a measure of income used to calculate how much of your income is taxable. It starts with things like wages, dividends, capital gains, interest, rental income and retirement distributions and then deducts certain payments you’ve made during the year like student loan interest and certain Individual Retirement Account (IRA) contributions. But it doesn’t include the standard deduction or itemized deductions that will be subtracted later. It’s the starting point for calculating your tax bill and it’s also used as the basis for qualifying for several deductions and credits.