Adjusted Gross Income

Adjusted Gross Income, or AGI, is a term used by the Internal Revenue Service to describe a taxpayer's gross income minus a set of standard adjustments to that income.  Adjustments that are made to gross income include costs such as moving expenses, alimony, tax penalties on early withdrawals, and contributions to an individual retirement account.

The adjusted gross income has become a standard measure for the IRS to determine eligibility for other beneficial programs such as IRAs and earned income credits.  The adjusted gross income is usually reported on line 35 of the tax return, or Form 1040.