"Taxable Income"

What It Is, What Counts, How To Calculate and How Can I Lower My Taxable Income ?

What is Taxable Income ?

Taxable income is the amount of income that is subject to income tax, after all allowable deductions and exemptions have been taken into account. 

How the Taxable Income Works ?

Once deductions & exemptions have been accounted for, the remaining amount is considered taxable income, and the amount of tax owed is calculated based on the applicable tax rates & tax brackets.

Sources of Taxable Income

Taxable income includes all types of income, such as wages, salaries, tips, bonuses, business income, investment income, dividend income, rental income, and capital gains.


Deductions and Exemptions 

Exemptions and deductions indirectly reduce the amount of taxes a filer owes by reducing his or her “taxable income,” which is the amount of income on which a filer pays taxes.

How Can I Lower My Taxable Income ?

To lower your taxable income, you can Contribute to retirement accounts, Claim deductions, Take advantage of tax credits, Maximize your healthcare spending, Consider tax-loss harvesting.

How to Calculate Taxable Income ?


To calculate your taxable income, you first need to determine your gross income. Calculating taxable income involves below steps.