Above-the-Line Deduction
Definition
Deductions subtracted from gross income to arrive at Adjusted Gross Income (AGI), available regardless of whether you itemize. Common above-the-line deductions include contributions to traditional IRAs, student loan interest (up to $2,500), self-employment tax (employer-equivalent portion), HSA contributions, educator expenses (up to $300), and alimony payments (for pre-2019 agreements). These are particularly valuable because they reduce AGI, which may unlock additional tax benefits that have AGI-based phase-outs.
Example
You contribute $4,000 to a traditional IRA and pay $1,500 in student loan interest. These $5,500 in above-the-line deductions reduce your AGI even if you take the standard deduction.
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