Non-Taxable Income

Non-Taxable Income refers to income that is not subject to federal income tax. This type of income is excluded from the taxpayer’s gross income calculation and therefore does not increase the taxpayer’s tax liability.

Examples of non-taxable income include certain gifts, inheritances, life insurance proceeds, and specific government benefits such as certain social security payments. Understanding what constitutes non-taxable income is essential for accurate tax reporting and financial planning, as it can significantly affect an individual’s overall taxable income and tax obligation.