Why the ‘Line’ on Your Tax Return Matters More Than You Think!

During the lengthy debate over provisions of the One Big Beautiful Bill Act, we often heard tax deductions described as “above-the-line” or “below-the-line.” What’s the difference? The “line” refers to the place on your tax return that lists adjusted gross income (AGI). Above-the-line deductions reduce income before calculating AGI. This can lower taxable income and help you qualify for other breaks tied to AGI. Examples include IRA contributions, student loan interest and HSA contributions. Below-the-line deductions are taken after AGI, so they reduce taxable income but not AGI. Examples include the standard deduction, itemized deductions and the qualified business income deduction.