Definition
Adjusted Gross Income (AGI) is your total gross income minus certain 'above-the-line' deductions you're allowed to subtract before arriving at taxable income. Above-the-line deductions include contributions to traditional IRAs, student loan interest, alimony paid (for pre-2019 divorces), and — under OBBBA 2026 — auto loan interest.
AGI is the foundation for many tax calculations. It determines whether you can take various deductions and credits, and it triggers certain phaseouts (like the child tax credit phase-out above $200K for single filers). It appears on line 11 of Form 1040.
AGI differs from taxable income: taxable income is AGI minus your standard or itemized deduction. It also differs from gross income: gross income is everything before any deductions.
How this affects your W-4
Your AGI affects several W-4 calculations indirectly. The child tax credit phases out above $200,000 AGI (single) — if you're near that threshold, reduce your Step 3 claim accordingly.
Some above-the-line deductions you plan to take (like traditional IRA contributions) aren't captured in standard W-4 fields. You can enter them in Step 4b to reduce withholding to reflect them.
See how adjusted gross income (agi) affects your withholding
Use the free W-4 calculator to calculate your exact withholding with your specific situation.
Open the W-4 Calculator →Related terms
Taxable Income
The portion of your income subject to federal income tax after all deductions are applied.
Above-the-Line Deduction
A deduction taken from gross income to arrive at AGI — available whether or not you itemize.
Child Tax Credit
A $2,200 tax credit per qualifying child under 17 — claimed in W-4 Step 3 to reduce withholding.