What is the meaning of Adjusted gross income (AGI)?

Your AGI is your gross, or total, income from taxable sources minus certain deductions. Income includes salary and other employment income, interest and dividends, and long- and short-term capital gains and losses. Deductions include unreimbursed business and medical expenses, contributions to a deductible individual retirement account (IRA), and alimony. You figure your AGI on page one of your federal tax return, and it serves as the basis for figuring the income tax you owe. AGI is also used to establish your eligibility for certain tax or financial benefits, such as deducting your IRA contribution or qualifying for personal tax exemptions.