Taxable Income

Taxable Income refers to the portion of an individual’s or business’s income that is subject to taxation by the government. It is calculated by taking gross income and subtracting allowable deductions, exemptions, and non-taxable income.

For individuals, taxable income includes wages, salaries, interest, dividends, and any other income sources, minus specific deductions such as student loan interest, retirement plan contributions, and standard or itemized deductions.

For businesses, taxable income is derived from revenue minus operating expenses, cost of goods sold, and other deductible expenses. The resulting amount is used to determine the income tax liability of the taxpayer.