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What deductions are subtracted from gross income to arrive at AGI for federal taxes?
Executive summary
Adjusted gross income (AGI) is gross income minus “above-the-line” adjustments listed on Schedule 1 of Form 1040; common examples include retirement and health‑savings deductions, student loan interest, and business expenses for certain employees (IRS definition) [1] [2]. Reporting and tax‑planning guides list many frequent adjustments—HSA contributions, certain self‑employment deductions, educator expenses, and student loan interest among them—but available sources do not provide a single exhaustive list in this dataset [3] [4].
1. What AGI is and where it appears — the legal baseline
The Internal Revenue Service defines AGI as your total (gross) income from all sources reduced by specific adjustments (the “above‑the‑line” deductions) that are reported on Schedule 1 of Form 1040; AGI is computed before you take either the standard deduction or itemized deductions [1] [2]. This makes AGI the pivot point for many limits and phase‑outs: tax credits, certain deduction floors (for example, medical expenses measured as a percent of AGI), and eligibility for retirement‑related rules all reference AGI or modified AGI [1] [5].
2. Common adjustments people will actually encounter
Tax‑prep and financial sites commonly list recurring adjustments that reduce gross income to AGI: Health Savings Account (HSA) contributions, traditional IRA deductions (when allowed), self‑employment tax deduction (the deductible half), self‑employed health insurance premiums, and student loan interest [3] [4]. Investopedia and H&R Block present these items as the prototypical “above‑the‑line” adjustments taxpayers use most often when computing AGI [3] [4].
3. Employer, self‑employed and special‑status items that matter
Self‑employed taxpayers get a number of unique adjustments — the deductible half of self‑employment tax, qualified business income rules in other parts of the code, and self‑employed retirement plan contributions — that can significantly lower AGI relative to wage earners [3]. Educator expenses and certain business expenses for reservists and performing artists are also called out as above‑the‑line options in public guidance [3].
4. Why AGI matters for downstream limits and deductions
AGI is used to measure thresholds and floors. Medical expenses, for example, are deductible only to the extent they exceed 7.5% of AGI, so a lower AGI can make it easier to meet that floor; similarly, itemized deduction caps and phase‑outs for credits frequently reference AGI or MAGI (modified AGI) [5] [1]. Recent tax changes through 2025 altered itemized deduction rules (charitable rules, SALT cap changes) and introduced new deduction mechanics, which further emphasize why taxpayers care about AGI projections [6] [7].
5. Recent policy changes that intersect with AGI (context and caveats)
Multiple 2025‑era law changes shifted deduction mechanics tied to AGI: charitable giving rules now offer limited non‑itemizer deductions and impose new floors on itemizers tied to AGI beginning in 2026; the SALT cap and other itemized limits also changed and include income‑based phase‑outs in some cases [6] [7] [5]. These changes mean that the same adjustments that reduce AGI may have larger or smaller downstream impacts depending on whether you itemize and on your income level [6] [7].
6. What the sources don’t settle — limits and an exhaustive list
Available sources in this set explain the concept and list many frequent adjustments but do not present a single exhaustive Schedule 1 checklist in one place; for a definitive, itemized list you must consult the IRS Schedule 1 instructions or current Form 1040 guidance [2] [1]. Likewise, sources here describe common items (HSA, IRA, educator expenses, student loan interest) but do not enumerate every special‑case adjustment or show every phase‑out formula [3] [4].
7. Practical tax‑planning takeaways
Because AGI influences eligibility for credits and the effective value of itemized deductions, taxpayers should prioritize above‑the‑line moves that are allowed in their situations — for example, maximizing HSA contributions, timing deductible retirement contributions, and accounting for self‑employment deductions if applicable — and run year‑end AGI estimates to see how recent law changes affect outcomes [3] [8]. Firms and guides recommend estimating both 2025 and 2026 AGI given the law changes that take effect across those years [8].
If you want, I can pull the precise current Schedule 1 adjustments from the IRS Form 1040 instructions and present them as a checklist with brief explanations and common limits cited. Available sources do not mention whether you prefer that format [2] [1].