"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.

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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 ?

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

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