Taxable Income


DEFINITION of 'Taxable Income'

The amount of income that is used to calculate an individual's or a company's income tax due. Taxable income is generally described as gross income or adjusted gross income minus any deductions, exemptions or other adjustments that are allowable in that tax year.

Taxable income is also generated from appreciated assets that have been sold or capitalized during the year and from dividends and interest income. Income from these sources is generally taxed at a different rate and calculated separately by the tax entity.


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BREAKING DOWN 'Taxable Income'

Individuals may choose to use a standard deduction amount for a given tax year. This amount is subtracted from gross income to arrive at the final taxable income figure. If individual deductions are claimed, the person or company will hope to have a total amount deducted from gross income lower than what would be achieved using the standard deduction. Some typical deductions that lower many tax bills include IRA contributions and certain business expenses.

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  1. What are the best free online calculators for calculating my taxable income?

    Free online calculators for determining your taxable income are located at, and Determining ... Read Full Answer >>
  2. What is the difference between taxable income and gross income?

    Gross income includes all of the income a person receives during a year that is not explicitly exempt from taxation, whereas ... Read Full Answer >>
  3. Will I make more money in a Roth 401(k) or a traditional 401(k)?

    When looking at which type of 401(k) makes more money, a Roth 401(k) or a traditional 401(k), it depends on the period of ... Read Full Answer >>
  4. What is the difference between a state income tax and a federal income tax?

    The United States has a multi-tiered income tax system under which taxes are imposed by federal, state and most local governments. ... Read Full Answer >>
  5. What is the highest marginal tax rate in the United States?

    In a marginal tax rate system, such as the one found in the United States, the more income one makes, the more one is expected ... Read Full Answer >>
  6. Can you calculate the marginal tax rate in Excel?

    Marginal tax rates are higher for higher-income individuals. Accurate information about current tax brackets is needed to ... Read Full Answer >>
  7. How are an employee's fringe benefits taxed?

    Common fringe benefits provide employees total compensation above and beyond stated wages or salaries, and a wide range of ... Read Full Answer >>
  8. What is the difference between gross income and taxable income?

    There are numerous tax terms that are beneficial to know and understand when you are preparing and filing your tax returns. ... Read Full Answer >>
  9. What are the penalties for early withdrawal from a Registered Retirement Savings ...

    Withdrawing from your Registered Retirement Savings Plan (RRSP) before retirement carries several penalties. Penalties for ... Read Full Answer >>
  10. What was the Mahonia company and why did it become the subject of a lawsuit?

    In 1992, J.P.Morgan went into the energy trading business by creating a venture company called Mahonia Limited. At least, ... Read Full Answer >>
  11. Will I pay taxes on my Social Security payouts?

    Some people have to pay federal income taxes on the Social Security benefit they receive. Typically, this occurs only when ... Read Full Answer >>
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    The "stretch IRA" is not a new IRA account on the market, or even a new investment concept, it is simply a wealth transfer ... Read Full Answer >>
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