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While researching how to determine my marginal tax rate, I came across the term "taxable income".

Is "Adjusted Gross Income" (AGI) the same thing as "taxable income"?

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This can be confusing, but I did find an article that tries to Make Sense of Income and Tax Terms You should ignore line numbers, because they can change every year.

You first start with your total income that is all your salary, interest, dividends, priors years tax refunds, capital gains, IRA distributions. This number already has your health insurance premiums, 401K and HSA contributions removed from your salary.

Then you calculate Adjusted Gross Income by subtracting some items including moving expenses, teacher supply expense, student loan interest, IRA contributions. these are special deductions that Congress wants everybody to be able to claim even if they don't itemize.

To calculate Modified Adjusted Gross Income then add back in the student loan interest and IRA deposits to establish how much of those amounts are truly deductible.

Taxable income is your AGI minus deductions (itemized or standard) and personal exemptions.

This amount then goes into the tax table or formula to determine how much tax you should have paid.

There are also tax credits for number of children, child care, college tuition... that need to be considered.

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  • To clarify matters just a bit, Federal income tax refunds from prior years are not taxable and don't get included in total income, but State income tax refunds are included in total income, though some part of the State tax refund might be excluded based on what a certain worksheet says. It depends on how much tax benefit you got from deducting that amount on Schedule A in previous years.
    – Dilip Sarwate
    Jul 25, 2013 at 4:20
  • To confuse a little more... Federal AGI and State AGI are not necessarily the same, and different states will have different AGIs for exactly the same numbers. Not to mention their calculation of taxable income.
    – littleadv
    Jul 25, 2013 at 17:49
  • Cool, thanks for the background. But...is "Adjusted Gross Income" (AGI) the same thing as "taxable income"? It would be helpful for future readers to get that answer at the top followed by the definitions you have that support your answer...
    – Jeromy French
    Jul 26, 2013 at 16:07
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No. There are additional credits (such as itemized or standard deductions and personal exemptions) against AGI that result in a different "taxable income".

Extra credit (line numbers confirmed on 2012 forms)

  1. On form 1040: line 38 is your AGI, line 43 is your taxable income.
  2. On form 1040EZ: line 4 is your AGI; line 6 is your taxable income.
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    I'd offer an example of when AGI is used vs taxable income.
    – JTP - Apologise to Monica ♦
    Jul 24, 2013 at 23:20
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    One more downvote on my accurate and perfectly acceptable answer and I can get the "peer pressure" badge!
    – Jeromy French
    Jul 25, 2013 at 14:39
  • It is perfectly correct to accept your own answer as the one that you find most satisfactory no matter how many downvotes it has received. On the other hand, the "Peer pressure" badge is not awarded for getting three or more downvotes but for deleting your own answer after it has received three or more down votes (which, by the way, it has: you have 4 downvotes and 2 upvotes for a net of -2). I hope no one else downvotes your answer. As the sadist said with a cruel smile to the masochist who cried piteously, "Hurt me! Hurt me!" "No!"
    – Dilip Sarwate
    Jul 26, 2013 at 2:29
  • @JoeTaxpayer I am pretty sure a good example is the Earned Income Tax Credit, which gets calculated from AGI, rather than Taxable Income. Correct me if I'm wrong.
    – AmitaiB
    Nov 22, 2017 at 19:54

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