Above-the-Line Deduction
Above-the-line deductions are adjustments subtracted from gross income to arrive at adjusted gross income (AGI), available to all taxpayers regardless of whether they itemize. Common examples include educator expenses, HSA contributions, self-employed health insurance, student loan interest, and IRA contributions.
Exam Tip
Above-the-line deductions reduce AGI and are available to ALL filers. Key ones: HSA, student loan interest, SE health insurance, educator expenses, IRA contributions.
EA exam baseline: For the 2026–2027 SEE, use Tax Year 2025 and federal tax law through December 31, 2025. Later-year amounts below are explicitly labeled comparisons, not the default exam year. IRS SEE policy.
What Are Above-the-Line Deductions?
Above-the-line deductions (adjustments to income) reduce your gross income to arrive at AGI. They appear on Schedule 1 of Form 1040 and are available even if you take the standard deduction.
Common Above-the-Line Deductions (2025)
| Deduction | Maximum Amount |
|---|---|
| Educator expenses | $300 ($600 MFJ both educators) |
| HSA contributions | $4,300 (self) / $8,550 (family) |
| Self-employed health insurance | 100% of premiums |
| Student loan interest | $2,500 |
| Traditional IRA | $7,000 ($8,000 age 50+) |
| Self-employment tax | 50% of SE tax |
| Alimony (pre-2019 agreements) | Amount paid |
Above vs. Below the Line
| Feature | Above-the-Line | Below-the-Line |
|---|---|---|
| Reduces AGI? | Yes | No |
| Available without itemizing? | Yes | Only if itemizing |
| Affects phase-outs? | Yes (lowers AGI) | No |
| Examples | HSA, student loan interest | SALT, mortgage interest |
Exam Alert
Above-the-line deductions reduce AGI, which cascades into eligibility for many credits and deductions. They are MORE valuable than below-the-line deductions because they benefit ALL taxpayers. Know which deductions are above vs. below the line!
2025 EA Exam Notes
The OBBBA deductions for qualified tips, qualified overtime, eligible car-loan interest and eligible seniors are separate Schedule 1-A deductions after AGI. They do not reduce AGI, even though eligible taxpayers can claim them whether they itemize or take the standard deduction.
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Adjusted Gross Income (AGI)
Adjusted Gross Income (AGI) is your total gross income minus specific above-the-line deductions (adjustments), serving as the starting point for calculating taxable income and determining eligibility for many tax benefits.
Itemized Deductions
Itemized deductions are specific expenses taxpayers can deduct from adjusted gross income instead of the standard deduction, including state and local taxes, mortgage interest, charitable contributions, and certain medical expenses.
Adjusted Gross Income (AGI)
Adjusted Gross Income (AGI) is gross income minus above-the-line deductions (adjustments to income). AGI is the key threshold used to determine eligibility for many tax credits, deductions, and phase-outs on Form 1040.
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