World Library  
Flag as Inappropriate
Email this Article

Taxable income

Article Id: WHEBN0003147513
Reproduction Date:

Title: Taxable income  
Author: World Heritage Encyclopedia
Language: English
Subject: Tax bracket, List of United States Supreme Court cases, International taxation, Income tax in the United States, Corporate tax in the United States
Collection: Taxation
Publisher: World Heritage Encyclopedia

Taxable income

Taxable income refers to the base upon which an income tax system imposes tax.[1] Generally, it includes some or all items of income and is reduced by expenses and other deductions.[2] The amounts included as income, expenses, and other deductions vary by country or system. Many systems provide that some types of income are not taxable and some expenditures not deductible in computing tax.[3] Some systems base tax on taxable income of the current period, and some on prior periods. Taxable income may refer to the income of any taxpayer, including individuals and corporations, as well as entities that themselves do not pay tax, such as partnerships.

Most systems require that all income realized be included in taxable income. Some systems provide tax exemption for some types of income.[4] Many systems impose tax at different rates for differing types (e.g., capital gains or salaries) or levels of income (e.g., graduated rates). In the United States, gross income includes all income realized from whatever source, but excludes particular tax exempt items, such as municipal bond interest. In 2010, the United Kingdom and the United States both provided reduced rates of tax for capital gains and dividends.

Most systems and jurisdictions allow business taxpayers to reduce taxable income by cost of goods or other property sold, as well as deductions for business expenses.[5] Many systems limit some sorts of business deductions. For example, deductions for automobile expenses are limited in the United Kingdom and United States.

Some systems allow tax deductions for certain nonbusiness expenses.[6] Such deductions may include personal expense items, such as a home mortgage interest deduction, and vary widely by jurisdiction. In addition, many systems only levy taxes on earnings above an income tax threshold, allow deductions for personal allowances or a minimum deemed amount of personal deductions. The United States Federal system allows a deduction for personal exemptions, as well as a minimum standard deduction in lieu of other personal deductions. Some states in the United States allow few personal deductions.

See also


  1. ^ Reporting income, Retrieved December 4, 2013
  2. ^ What is taxable income?, January 23, 2012, Retrieved December 4, 2013
  3. ^ Allowable Deductions, Retrieved December 4, 2013
  4. ^ Income tax exempt funds, Retrieved December 4, 2013
  5. ^ Business income, deductions and tax returns, Retrieved December 4, 2013
  6. ^ Sec. 1.212-1 Nontrade or nonbusiness expenses, Retrieved December 4, 2013
This article was sourced from Creative Commons Attribution-ShareAlike License; additional terms may apply. World Heritage Encyclopedia content is assembled from numerous content providers, Open Access Publishing, and in compliance with The Fair Access to Science and Technology Research Act (FASTR), Wikimedia Foundation, Inc., Public Library of Science, The Encyclopedia of Life, Open Book Publishers (OBP), PubMed, U.S. National Library of Medicine, National Center for Biotechnology Information, U.S. National Library of Medicine, National Institutes of Health (NIH), U.S. Department of Health & Human Services, and, which sources content from all federal, state, local, tribal, and territorial government publication portals (.gov, .mil, .edu). Funding for and content contributors is made possible from the U.S. Congress, E-Government Act of 2002.
Crowd sourced content that is contributed to World Heritage Encyclopedia is peer reviewed and edited by our editorial staff to ensure quality scholarly research articles.
By using this site, you agree to the Terms of Use and Privacy Policy. World Heritage Encyclopedia™ is a registered trademark of the World Public Library Association, a non-profit organization.

Copyright © World Library Foundation. All rights reserved. eBooks from World Library are sponsored by the World Library Foundation,
a 501c(4) Member's Support Non-Profit Organization, and is NOT affiliated with any governmental agency or department.