Correct answer: B. Total gross income minus above-the-line adjustments to income reported on Schedule 1, calculated before the standard deduction or itemized deductions are applied

The IRS defines AGI as total gross income minus certain adjustments to income, often called 'above-the-line' deductions because they are subtracted on Schedule 1 before the standard or itemized deduction is ever applied; Form 1040 adds total income on line 9, subtracts Schedule 1 adjustments on line 10, and reports AGI on line 11, all before the deduction is taken on a later line. The first and third options are wrong because the standard or itemized deduction is subtracted from AGI to reach taxable income, a step that happens after AGI is already calculated, not as part of calculating it. The third option is doubly wrong because itemized deductions are an alternative to the standard deduction, not something applied automatically before AGI. The fourth option is wrong because personal exemptions were suspended for tax years 2018 through 2025 and, in any case, exemptions would apply to taxable income, not to computing AGI itself.

Source: IRS 'Adjusted gross income' (irs.gov/filing/adjusted-gross-income); 2025 Form 1040 and Schedule 1 instructions