AfterTaxLabAdjusted gross income (AGI)
Adjusted Gross Income, or AGI, represents your total gross income minus specific deductions taken before reaching taxable income. It measures your financial standing for tax purposes, serving as the baseline for determining eligibility for various tax credits and itemized deductions. AGI sits between gross pay and taxable income in the tax calculation process. It is distinct from your take-home pay, which accounts for all payroll withholdings including Social Security and Medicare taxes.
Adjusted gross income (AGI), in plain terms
AGI is often confused with taxable income, though they are separate metrics. While gross pay is your total compensation before any deductions, AGI reflects adjustments like contributions to retirement accounts or student loan interest. It does not include standard or itemized deductions, which are subtracted later to reach your final taxable income figure. Understanding AGI is essential for those reviewing their tax returns or planning for federal tax obligations throughout the year.
Adjusted gross income (AGI) on a real salary
Every figure below is produced by the same engine that runs the AfterTaxLab calculators — nothing here is estimated by hand.
| Item | 2026 figure |
|---|---|
| Gross pay | $100,000 |
| Pre-tax contribution (example) | $10,000 |
| Taxable income after the standard deduction | $73,900 |
| Federal tax with the pre-tax contribution | $10,970 |
| Federal tax without it | $13,170 |
A worker earning a salary of $100,000 might reduce their taxable income by making a pre-tax contribution of $10,000 to a retirement plan. This adjustment lowers the amount of income subject to federal tax, resulting in a taxable income of $73,900. By lowering this taxable base, the individual reduces their federal tax burden, demonstrating how specific pre-tax choices directly influence the final amount owed to the government.
Using adjusted gross income (agi) on AfterTaxLab
AfterTaxLab does not print an AGI line on its results pages. Instead, the engine moves straight from gross pay to taxable income to simplify the view of your take-home pay. Users should focus on the taxable income line to see how their pre-tax contributions affect their federal tax, which can fall from $13,170 to $10,970 depending on these inputs.
What is not an adjustment to income
The most common AGI mistake is treating the standard deduction as something subtracted on the way to AGI. It is not. AGI is calculated before the standard or itemized deduction is applied, so a single filer with $75,000 of wages and no pre-tax contributions has an AGI of $75,000 whichever deduction they claim. Charitable gifts, mortgage interest and state taxes paid are itemized deductions: they lower taxable income, not AGI.
Pre-tax payroll deductions behave differently. A traditional 401(k) contribution, a health premium taken through a Section 125 plan, a health savings account contribution made through payroll and a transit benefit all reduce the wages reported on your W-2, so they reduce AGI itself. A Roth contribution does not: the money is taxed now, so it never leaves the AGI calculation.
AGI versus MAGI: same salary, different numbers
Many credits and thresholds are tested against modified adjusted gross income rather than plain AGI. MAGI starts from AGI and adds back specific items — student loan interest you deducted, the foreign earned income exclusion, and for some provisions tax-exempt interest. The add-backs differ by provision, which is why one household can sit inside a program's limit and outside another's at the same time.
Retirement contribution limits, education credits, the child tax credit phase-out and marketplace premium subsidies each use their own version of the number, so "what is my AGI" has no single answer once credits enter the picture.
A worked example on the AfterTaxLab engine
Take a single filer in Texas on $75,000. With no pre-tax contributions, the engine reports $7,670 federal tax, $5,738 FICA and no state tax, leaving $61,592. Add a $6,000 traditional 401(k) contribution and reported wages — and therefore AGI — drop to $69,000; federal tax falls to $6,350, FICA stays at $5,738 because 401(k) money still pays payroll tax, and take-home rises to $62,912. The $1,320 difference is the tax saved, not the $6,000 contributed.
Scale the same test to $100,000 with a $10,000 contribution: AGI becomes $90,000, federal tax $10,970 instead of $13,170, and take-home $81,380 instead of $79,180. The pattern holds — a pre-tax contribution moves AGI one-for-one, but only the marginal rate applied to that slice comes back as extra cash.
Adjusted gross income (AGI): common questions
Is AGI the same as my take-home pay?
No. AGI is a specific tax calculation used by the IRS to determine your tax bracket and credit eligibility. Take-home pay is the actual money deposited into your bank account after all taxes and deductions, such as Social Security and Medicare, are removed from your gross salary.
Why does AGI matter for my tax return?
Your AGI serves as the starting point for calculating your final federal income tax liability. Many tax credits and deductions are phased out or limited based on the value of your AGI, making it a critical figure for determining your overall tax status at the end of the year.
Does AfterTaxLab show my AGI?
No. AfterTaxLab is designed to focus on your net take-home pay rather than complex tax return filings. The interface moves directly from gross pay to taxable income, allowing you to see the immediate effect of pre-tax contributions on your paycheck without needing to navigate tax-specific definitions like AGI.
Figures calculated with the AfterTaxLab 2026 engine: federal brackets and standard deduction ($16,100 single), Social Security wage base $184,500, published 2026 state rates. Estimates for planning only — not tax advice. Last verified 21 Sep 2026 · methodology.