Taxable Income
Income that's actually taxed after subtracting deductions from AGI. Used to determine tax bracket and total tax owed.
What You Need to Know
Taxable income is what you actually pay taxes on after all deductions. Start with Adjusted Gross Income (AGI), subtract standard or itemized deductions, and the result is taxable income.
For 2024: $100,000 AGI - $14,600 standard deduction = $85,400 taxable income. This $85,400 determines your tax bracket and calculates your total federal tax.
The process: Gross Income → AGI (minus above-the-line deductions) → Taxable Income (minus standard/itemized deductions) → Tax Owed (apply brackets).
Lower taxable income = lower taxes. Maximize pre-tax 401k contributions, HSA deposits, and deductions to reduce this number. Every $1,000 reduction saves $120-370 depending on your tax bracket.
Sources & References
This information is sourced from authoritative government and academic institutions:
- irs.gov
https://www.irs.gov/publications/p17
Related Calculators & Tools
Put your knowledge into action with these interactive tools:
Related Terms in Taxes
Effective Tax Rate
Your actual tax rate—total taxes paid divided by total income. Lower than marginal rate because of brackets and deductions.
Itemized Deductions
List of specific deductions (mortgage interest, charity, medical, taxes) that can exceed standard deduction and lower taxable income.
Ordinary Income
Income taxed at regular rates—wages, salary, interest, short-term capital gains. Taxed higher than qualified dividends and long-term capital gains.