Taxable income

Taxable income is the portion of your income that is subject to income tax. It includes wages, salaries, bonuses, rental income, and investment earnings, minus certain deductions and exemptions allowed by tax law. Deductions might include expenses like mortgage interest, student loans, or medical costs, which reduce your overall income for tax purposes. The resulting amount, after these deductions, is what the government uses to calculate how much tax you owe. Essentially, it’s your earnings adjusted for eligible expenses, reflecting the actual income on which you will pay taxes.