What common above-the-line deductions reduce gross income to calculate AGI?
Executive summary
Above-the-line deductions are adjustments subtracted from gross income to arrive at Adjusted Gross Income (AGI); common examples cited across tax guides include student loan interest (up to $2,500), HSA contributions (limits vary by family/individual), IRA contributions, and educator expenses [1] [2] [3]. The 2025 “One Big Beautiful Bill” (OBBBA) added new above-the-line items — e.g., temporary overtime and tip deductions and above-the-line charitable deductions for non‑itemizers — and changed standard deduction levels that affect who benefits from these adjustments [4] [5] [6].
1. What “above-the-line” means and why it matters
Above‑the‑line deductions are taken before AGI is calculated, so they reduce AGI directly and can unlock or expand other tax breaks that are AGI‑sensitive; tax guides explain that you can claim them even if you take the standard deduction, making them broadly useful for taxpayers who don’t itemize [1] [3]. Wikipedia summarizes the legal framing: these adjustments are the items IRC §62 allows taxpayers to subtract from gross income to compute AGI [7].
2. The routine list: deductions you’ll see on most tax‑help pages
Multiple practitioner and consumer sources list overlapping, commonly claimed above‑the‑line items: student loan interest (noted as a very common deduction, with a $2,500 cap mentioned in guidance), Health Savings Account (HSA) contributions (with 2025 contribution limits cited), traditional IRA contributions, and educator expenses — each has its own rules and income limits [2] [3]. Nolo and other explainers likewise emphasize that these adjustments reduce gross income before AGI and are called “adjustments to income” on Form 1040/Schedule 1 [8] [3].
3. New and temporary items introduced by recent legislation
The One Big Beautiful Bill Act added several above‑the‑line provisions for 2025–2028: an above‑the‑line deduction for qualified overtime (caps of $12,500 individual / $25,000 joint reported in law summaries), and deductions for tips and certain tip income, plus changes to charitable treatment for non‑itemizers — all of which change who benefits and by how much [4] [5] [6]. Law‑firm and policy summaries underline these items are time‑limited in many cases and subject to income phaseouts [4] [5].
4. Charitable giving: a shifting above‑the‑line landscape
Under OBBBA, non‑itemizers will gain an above‑the‑line cash charitable deduction beginning in 2026 (single up to $1,000; joint $2,000 reported by several advisers), while itemizers face new floors and limitations that change the calculus for bunching gifts and timing donations [9] [6] [10]. Analysts note the net revenue and behavioral effects are complex: Treasury/policy estimates cited show the non‑itemizer carve‑out reduces revenue substantially while changes to itemizers raise revenue, creating distributional impacts [6].
5. Limits, phaseouts and traps taxpayers must watch
Each above‑the‑line deduction comes with distinct caps, MAGI limits, and eligibility rules: student loan interest has a cap ($2,500 referenced), HSA contributions have set limits for individual and family plans (2025 amounts cited), and new overtime/tip deductions have income phaseouts and caps [2] [4]. Practitioners caution that changes in the law — such as floors on charitable deductions for itemizers or indexed standard deductions — can indirectly affect the value of these adjustments [10] [11].
6. Who benefits most — and who may lose under the new rules
Because above‑the‑line deductions reduce AGI for everyone, they most directly help those who don’t itemize or who need a lower AGI to qualify for credits; yet recent 2025 law changes (larger standard deduction and new non‑itemizer charity carve‑outs) mean fewer taxpayers will itemize and the distributional impact favors middle‑income filers for some provisions while higher‑income taxpayers still capture large benefits from itemized rules that remain [1] [10] [12].
7. Practical next steps for taxpayers
Review eligibility for traditional above‑the‑line items — student loan interest, IRA/HSA contributions, educator expenses — because you can claim them regardless of itemizing [3] [2]. For 2025–2028, evaluate whether temporary overtime/tip deductions or the timing of charitable gifts changes your optimal strategy; several advisories recommend year‑by‑year planning because many provisions are temporary or phased [4] [5] [9].
Limitations: available sources do not list a single exhaustive statutory list of Section 62 adjustments in force after every 2025 change; for precise eligibility, dollar limits, and phaseout calculations for your tax year, consult the IRS instructions or a tax professional — the summaries above draw only on the cited reporting and practitioner guidance [7] [2].