What are "above-the-line" deductions?

"Above-the-line" deductions are specifically designed to reduce a taxpayer's Adjusted Gross Income (AGI) and can be claimed even if the taxpayer does not itemize their deductions. This makes them particularly valuable because they are accessible to a wider range of taxpayers. By lowering AGI, these deductions can also impact eligibility for other tax benefits and credits, which are often phased out at higher income levels.

Examples of above-the-line deductions include contributions to traditional IRAs, student loan interest, tuition and fees, and certain business expenses for self-employed individuals. Since these deductions are available regardless of whether or not a taxpayer itemizes their deductions, they provide an opportunity for many to reduce their taxable income more efficiently. This is fundamentally different from below-the-line deductions (itemized deductions) that only benefit those who choose to itemize their deductions on Schedule A.