Taxable Income

Category: tax

The portion of your adjusted gross income that is actually subject to taxation after deductions.

Taxable income is the "final number" the IRS uses. It is your total income minus your deductions (standard or itemized) and adjustments. This is the figure that gets multiplied by your marginal tax bracket to determine what you owe.

Common Examples

• By maximizing pre-tax 401k and HSA contributions, the taxpayer successfully reduced their total taxable income for the fiscal year.
• The IRS formula calculates your tax liability based specifically on your final taxable income, not your total gross earnings.