What kind of income is specifically excluded from being considered when determining AGI?

Tax-exempt interest income is excluded from being considered when determining Adjusted Gross Income (AGI) because it is not subject to federal income tax. This means that although the taxpayer may earn this income, it does not increase their overall tax liability since it is specifically defined as tax-exempt under the Internal Revenue Code. Thus, when calculating AGI, which is used as a basis for various tax deductions and credits, tax-exempt interest income is not included in the total.

Other options involve incomes that are generally taxable. For example, alimony received under agreements made prior to the 2019 tax changes is considered taxable income, and wages from self-employment are also included in AGI calculations as they are subject to income tax. Child support payments, while important considerations, are similarly not taxable to the recipient and, therefore, also do not contribute to AGI. However, they are not classified as income for tax purposes like tax-exempt interest is during AGI computation.