What is Taxable Income?
Definition Taxable income is the amount actually subject to tax after subtracting the standard or itemized deductions, and the qualified business income deduction, from adjusted gross income. Tax rates and brackets are applied to this figure, not to gross income. It is the final base on which your regular income tax is calculated.
It is the number that drives the tax bill, so planning that shifts deductions or income to manage taxable income is at the heart of tax strategy.