Legal Definitions - AGI

AGI stands for adjusted gross income. It is the income earned by an individual after certain adjustments are made to their gross income. Gross income includes all the money an individual earns, such as wages, dividends, capital gains, business income, and retirement distributions.

Adjustments are made to the gross income to calculate AGI. These adjustments can include student loan interests, alimony payments, or retirement savings. The AGI is calculated by the IRS to determine an individual's income tax liability for the taxable year.

The AGI affects the extent to which medical expenses, nonbusiness casualty and theft losses, charitable contributions, and other items may be deducted.

For example, if an individual earned $50,000 in gross income but had $5,000 in student loan interests and $2,000 in alimony payments, their AGI would be $43,000 ($50,000 - $5,000 - $2,000).