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Adjusted gross income, or AGI, can be useful to know for several reasons. For example, eligibility for some lucrative tax deductions and credits is determined by AGI, as is eligibility to contribute to certain types of retirement accounts.

If you have not yet received your W-2 from your employer, you can calculate your AGI using information from your last pay stub of the year.

How to calculate AGI
First, locate your year-to-date earnings on your pay stub. This is the total amount you earned before any taxes or deductions came out of your paychecks.

Once you've found that, add up all of your pre-tax deductions for the year. These generally include insurance (health, dental, vision, life, etc.), 401(k) or other retirement contributions, and employer-paid public transportation costs. Add these together, and then subtract from your total earnings.

If you had any other income for the year, such as from self-employment or unemployment compensation, add this to the total as well.

Next, you'll need to add up your deductions. AGI only takes a few specific tax deductions into account, including:

  • Health Savings Account (HSA) contributions
  • Educator expenses (up to $250)
  • Qualified moving expenses
  • Contributions to a traditional IRA or other pre-tax retirement account such as a SEP IRA or SIMPLE IRA (remember that 401(k) contributions were already accounted for)
  • Alimony you paid
  • One-half of the self-employment tax
  • Tuition and fees (Note that you can claim a tuition and fees deduction or an education tax credit, not both. If you plan to claim either the American Opportunity Credit or Lifetime Learning Credit, do not subtract tuition and fees for AGI purposes.)
  • Student loan interest

Again, not all of these will apply to everyone, and there are a few other less common AGI deductions. However, for the vast majority of taxpayers, the deductions listed here are sufficient to calculate AGI.

Finally, add up these deductions and subtract it from the total in the previous step. Combining the steps into one formula looks like this:

Agi

An example
To illustrate this, let's say that your last pay stub shows total earnings of $60,000 for the year. And, you have the following pre-tax deductions:

Item

Amount

Health insurance

$2,500

Other insurance

$1,000

401(k) contributions

$5,000

Public transportation paid by employer

$500

So, your pre-tax deductions add up to $9,000. To keep it simple, we'll say that you have no other income. And, you qualify for the following AGI deductions:

Deduction

Amount

Traditional IRA contributions

$3,000

Educator expenses

$250

Student loan interest

$1,750

Using this information, you have AGI deductions of $5,000. Plugging the numbers into the formula calculates an AGI of $46,000.

Agi

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