What Is Taxable Income?

By Adam Levy – Updated Dec 11, 2024 at 11:43 AM

Key Points

Taxable income equals adjusted gross income minus deductions.
To lower taxable income, defer income or increase deductions.
Taxable income includes wages, business income, and investment returns.

Taxable income is the amount of income subject to taxes after deductions and exemptions. Generally, any amount included in your income above the deductible amount is subject to taxation unless it's specifically exempted as nontaxable income.

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Tax forms with cash, calculator, glasses, and pencils. — Image source: Getty Images.

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Federal Income Tax

The federal income tax is the primary source of revenue for the United States government.

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Deferred Revenue

Income received for goods or services not yet delivered, recognized as revenue when services are provided or goods are sold.

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About the Author

Adam Levy is a contributing Motley Fool stock market analyst covering technology, consumer, and financial stocks and how policy, economic, and consumer trends shape personal finance, Social Security and retirement savings. Before The Motley Fool, Adam was a financial advisor at Edward Jones. He studied finance and electrical engineering at Carnegie Mellon University.

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