26 U.S.C. § 62 — Adjusted gross income defined

(a) General rule: For an individual, 'adjusted gross income' (AGI) means gross income minus a list of specific deductions. Here is what those deductions cover: (1) Trade and business deductions: deductions from running a trade or business, as long as the trade or business isn't just the person working as someone else's employee. (2) Certain employee deductions, in four parts: (A) reimbursed employee expenses — costs an employee pays that are reimbursed under an employer's expense-allowance arrangement (it doesn't matter if a third party actually pays the reimbursement); (B) expenses of a 'qualified performing artist' (defined in subsection (b)) for performing services in the arts as an employee; (C) certain expenses of a state or local government official paid partly or wholly on a fee basis; (D) up to $250 of an 'eligible educator's' expenses for professional development and classroom supplies (this dollar amount is defined and adjusted for inflation in subsection (d)); (E) certain travel expenses of reserve-component military members who travel more than 100 miles from home for their reserve duties, capped at federal travel-expense rates. (3) Losses from selling or exchanging property. (4) Deductions tied to rental or royalty property, including depreciation, production-of-income expenses, and depletion. (5) For a life tenant, a trust income beneficiary, or an heir, legatee, or devisee of an estate: the depreciation and depletion deductions tied to that property. (6) Retirement-plan deductions for certain self-employed individuals. (7) The deduction for retirement savings contributions. (8) Repealed in 1996. (9) Deductions for losses from penalties charged for withdrawing money early from a time savings account, certificate of deposit, or similar account — as long as the loss was from a for-profit transaction. (10) Repealed in 2017. (11) Reforestation expenses. (12) Deductions for repaying supplemental unemployment compensation benefits to certain trusts, when the repayment is required because the person got trade-readjustment allowances under specific trade laws. (13) Jury duty pay that an employee hands over to their employer in exchange for the employer still paying the employee's regular wages during jury service. (14) Repealed in 2014. (15) Moving expenses. (16) Archer MSA (medical savings account) deductions. (17) Interest paid on education loans. (18) Repealed in 2020. (19) Health savings account deductions. (20) Attorney fees and court costs paid in connection with certain unlawful-discrimination claims (defined in subsection (e)) or claims under specific federal fraud or Social Security laws — but only up to the amount of the settlement or judgment that's counted in the person's gross income. (21) Attorney fees and court costs for whistleblower awards under IRS whistleblower law, and — for tax years after 2017 — under securities-fraud, state false-claims, or commodity-exchange whistleblower laws. This deduction also can't exceed the amount of the award included in gross income. The subsection closes by saying no item can be deducted twice, and the pass-through business income deduction under section 199A doesn't count as one of these listed deductions. (b) Qualified performing artist: A person counts as a 'qualified performing artist' for a tax year if all three of these are true: they worked as an employee performing in the arts for at least two employers that year; their allowable performing-arts business deductions were more than 10% of their gross income from those performances; and their adjusted gross income for the year (figured without this special deduction) was $16,000 or less. An employer doesn't count toward the 'two employers' rule unless the person was paid at least $200 by that employer for the performances. For married people: except for couples who lived apart all year, this deduction only applies if the couple files a joint return. On a joint return, the individual requirements are checked separately for each spouse, but the $16,000 income limit is checked using their combined income. Marital status and what counts as a 'joint return' follow other parts of the tax code. (c) Certain arrangements not treated as reimbursement arrangements: An arrangement between an employer and employee is never treated as a 'reimbursement arrangement' (the kind that supports the deduction in (a)(2)(A)) if either: the employee doesn't have to prove the expenses to whoever is paying the reimbursement, or the employee gets to keep any leftover money beyond the proven expenses. This proof requirement doesn't apply, though, to expenses that don't need proof under a related rule in section 274(d). (d) Definitions; special rules: 'Eligible educator' means a kindergarten-through-12th-grade teacher, instructor, counselor, principal, or aide who works at a school for at least 900 hours in a school year. 'School' means any school offering K-12 education, as defined by state law. The educator deduction is only allowed for expenses beyond what the person can already exclude from income under three other tax-code sections (135, 529(c)(1), or 530(d)(2)). Starting in tax years after 2015, the $250 educator-expense limit rises each year using a cost-of-living formula: take the $250 amount, multiply it by the cost-of-living adjustment for that year, and round the increase to the nearest $50. (e) Unlawful discrimination defined: This subsection lists exactly which laws count as 'unlawful discrimination' for the deduction in (a)(20). It includes: the Civil Rights Act of 1991, several sections of the Congressional Accountability Act of 1995, the National Labor Relations Act, the Fair Labor Standards Act of 1938, parts of the Age Discrimination in Employment Act of 1967, parts of the Rehabilitation Act of 1973, a section of ERISA (the pension-protection law), Title IX of the Education Amendments of 1972, the Employee Polygraph Protection Act of 1988, the Worker Adjustment and Retraining Notification Act, a section of the Family and Medical Leave Act of 1993, the chapter of veterans' law protecting reservists' jobs, several sections of the Revised Statutes' civil-rights laws, several sections of the Civil Rights Act of 1964, several sections of the Fair Housing Act, several sections of the Americans with Disabilities Act of 1990, any federal whistleblower-protection law that bans firing, discriminating against, or retaliating against an employee for asserting rights under federal law, and finally any other federal, state, or local law (or common-law claim allowed under such law) that enforces civil rights or regulates the employment relationship — including wage and benefits claims and bans on firing or retaliating against employees for asserting their rights.