Adjusted Gross Income (AGI)

Adjusted gross income (AGI) is your total income minus specific deductions, like contributions to a traditional IRA, student loan interest, or self-employment tax. It's a number you'll find on your federal tax return (Form 1040, line 11), and it's the starting point for calculating your Modified Adjusted Gross Income (MAGI), which determines your eligibility for Marketplace subsidies.

Your AGI includes wages, salaries, tips, business income, investment income, retirement distributions, Social Security benefits (the taxable portion), alimony received (for agreements before 2019), and most other forms of income. From that total, you subtract "above-the-line" deductions, including educator expenses, health savings account contributions, IRA contributions, and self-employment health insurance premiums.

For Marketplace purposes, your MAGI, which starts with AGI and adds back certain items like tax-exempt interest and non-taxable Social Security benefits, is what determines whether you qualify for premium tax credits and cost-sharing reductions. The closer your MAGI is to the federal poverty level thresholds, the more financial help you may receive.

Understanding your AGI matters when you're estimating income for your Marketplace application. If you over- or under-estimate, you'll need to reconcile at tax time, and for 2026, there are no caps on how much excess APTC you might have to repay. Getting your AGI estimate as accurate as possible protects you from a surprise tax bill.