Adjusted Gross Income AGI
Definition of 'Adjusted Gross Income AGI'
For United States individual income tax, taxable income is adjusted gross income (AGI) less allowances for personal exemptions and itemized deductions. Adjusted gross income is gross income less certain specific items. For most individual tax purposes, AGI is more relevant than gross income.
Gross income is sales price of goods or property, less cost of the property sold, plus other income. It includes wages, interest, dividends, business income, rental income, and all other types of income. Adjusted gross income is gross income less deductions from a business or rental activity and 21 other specific items.
Several deductions (e.g. medical expenses and miscellaneous itemized deductions) are limited based on a percentage of AGI. Certain phase outs, including those of lower tax rates and itemized deductions, are based on levels of AGI. Many states base state income tax on AGI with certain deductions.
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