Adjusted Gross Income (AGI) is a key figure used in the United States tax system. It represents an individual's total income, including wages, dividends, and retirement distributions, minus specific deductions. These deductions can include contributions to retirement accounts and student loan interest, which help lower the overall taxable income. AGI is important because it determines eligibility for various tax credits and deductions. A lower AGI can lead to a reduced tax liability, making it beneficial for taxpayers to understand and calculate their AGI accurately when filing their tax returns.