Section 62 of the tax code lists every deduction that comes off gross income to give AGI. Besides IRA contributions, it includes the expenses of a business you own, losses from selling property and contributions to a self-employed retirement plan. A bank’s penalty for cashing in a CD early is on the list too.
On the 2025 Form 1040, AGI is line 11a, your total income minus the adjustments from Schedule 1. Line 11b repeats it at the top of page 2. To e-file, you may be asked for last year’s AGI to confirm your identity. Your IRS online account shows it.
Taxable income comes after AGI. You subtract the standard deduction or your itemized deductions, then any qualified business income deduction. Last come the new Schedule 1-A deductions for tips, overtime, car loan interest and seniors, so those do not lower your AGI.
Many tax limits are measured against AGI. Medical costs, for example, count only above 7.5% of it. Other limits use modified AGI, which starts from AGI and adds back or leaves out certain items.
Sources
- 26 U.S.C. § 62, Adjusted gross income defined
- IRS, Form 1040 (2025), U.S. Individual Income Tax Return
- 26 U.S.C. § 213, Medical, dental, etc., expenses
- IRS, Get your tax records and transcripts
Reviewed and updated September 2026. General information, not advice for your situation.