Chip-Stapleton-4-What is adjusted gross income How is it taxed
Chip Stapleton explains that adjusted gross income is your gross income minus IRS-allowed deductions, determining the income that is actually taxable for federal and state taxes.
Video Transcript
Adjusted gross income is a factor of your gross income, which is your salary. So you make ninety thousand dollars a year, that ninety thousand dollars is your gross income plus any dividends or interest or any outside income you have from either side hustles or you own your own business. All that comes into your gross income, which is kind of top line revenue for a company. Adjusted gross income is going to take out specific deductions that the IRS allows. That could be retirement plan contributions, that could be benefits, student loan interest, mortgage interest, or even the standard deduction. That's going to lower your income that is taxable. And it's that adjusted gross income that goes into the federal and state income tax brackets.
