Taxable Income
Definition
Your adjusted gross income minus either the standard deduction or itemized deductions. This is the actual amount of income subject to federal income tax. Tax brackets and rates are applied to your taxable income, not your gross income or AGI.
Example
If your AGI is $70,000 and you take the standard deduction of $15,000 (single filer), your taxable income is $55,000.
Related Terms
Adjusted Gross Income (AGI)
Your total gross income minus specific deductions (called "adjustments to income...
Standard Deduction
A fixed dollar amount that reduces your taxable income, available to all taxpaye...
Marginal Tax Rate
The tax rate applied to your last dollar of taxable income. The US uses a progre...