Taxable Income

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Taxable income refers to the portion of an individual or business’s income that is subject to income tax. Taxable income is calculated by subtracting deductions, exemptions, and other allowable expenses from total income.

Examples of taxable income for individuals may include wages, salaries, tips, and interest income. For businesses, taxable income may include profits, rental income, and capital gains.

Taxable income is typically subject to both federal and state income taxes, and the amount of tax owed is based on the taxpayer’s income tax bracket. In some cases, certain types of income may be excluded from taxable income, such as income from tax-exempt bonds or certain types of retirement accounts.

It is important to accurately calculate taxable income in order to determine the appropriate amount of income tax owed to the government.

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