Topic 03 · 5 min read

Adjustments to Income

Deductions you get even if you never itemize.

A handful of deductions come off before adjusted gross income is calculated, which is why they are often called above-the-line. Everyone who qualifies can take them, whether they itemize or not, and they lower the AGI that other rules are measured against.

What to know

Retirement contributions

Money put into a traditional IRA or a self-employed plan can reduce income in the year it goes in.

Health savings accounts

Contributions to an HSA paired with a high-deductible health plan are deductible, grow untaxed, and come out untaxed for medical costs.

Student loan interest

Up to a yearly cap of interest paid on qualifying student loans can be deducted, subject to income limits.

Educator and self-employed costs

Teachers can deduct classroom supplies; the self-employed can deduct half of their self-employment tax and their own health insurance premiums.

Why AGI matters

Credits, deduction limits, and even health insurance subsidies phase out based on AGI, so lowering it can unlock benefits far larger than the deduction itself.

Watch out for

• Each adjustment has its own eligibility rules and income limits.
• Contributions usually must be made by the filing deadline to count for the prior year.
• Roth contributions are not deductible; the benefit comes later instead.