[1] It is used to calculate taxable income, which is AGI minus allowances for personal exemptions and itemized deductions.
For most individual tax purposes, AGI is more relevant than gross income.
Certain phase outs, including those of lower tax rates and itemized deductions, are based on levels of AGI.
The definition of "modified AGI" varies according to the purpose for which the related calculation is being used.
Common additions include tax exempt interest, the excluded portion of Social Security benefits and tax-free foreign earned income.