TaxWrenTax glossary · Updated
What is taxable income?
Short answer
The income your tax brackets apply to: adjusted gross income minus the standard deduction (or your itemized deductions) and other deductions such as the qualified business income deduction.
Taxable income is the amount the tax brackets are applied to. It is always lower than what you earn, because you first subtract adjustments to get adjusted gross income and then your deductions.
The formula
Taxable income = AGI − standard or itemized deductions − other deductions
- Standard or itemized: the standard deduction ($16,100 single in 2026) or your itemized deductions, whichever is larger.
- Qualified business income deduction: up to 20% of business income for the self-employed and owners of pass-through businesses.
- Deductions for 2025 to 2028 (Schedule 1-A), taken whether or not you itemize: qualified tips (up to $25,000), the overtime premium (up to $12,500, $25,000 joint), car loan interest on a new car assembled in the US (up to $10,000) and the senior deduction (up to $6,000 per person 65 or older), each with an income limit.
Example: a $75,000 salary in 2026
A single filer earns $75,000 in wages with no other income or adjustments, so AGI is $75,000. Subtracting the $16,100 standard deduction leaves $58,900 of taxable income, taxed bracket by bracket:
| Rate | Taxable income in the bracket | Tax |
|---|---|---|
| 10% | $12,400 | $1,240 |
| 12% | $38,000 | $4,560 |
| 22% | $8,500 | $1,870 |
| Total | $58,900 | $7,670 |
The tax is 10.2% of the salary (the effective rate), even though the last dollars fall in the 22% bracket (the marginal rate). Credits such as the child tax credit then reduce the tax itself, not taxable income.
Taxable income vs. other income figures
- Gross income comes before any deduction and decides whether you must file.
- AGI comes after adjustments and sets many income limits.
- Taxable income comes after all deductions and sets your tax and your bracket.
Your state may start from federal AGI or taxable income and apply its own deductions; the income tax calculator shows both.
Work it out
Related terms
- Adjusted gross income
- Your gross income minus the adjustments listed on Schedule 1 of Form 1040, such as deductible IRA and HSA contributions, student loan interest and the deductible part of self-employment tax. It is on line 11 of Form 1040.
- Standard deduction
- A fixed amount that reduces your taxable income when you don't itemize: $16,100 for single filers, $32,200 for married couples filing jointly and $24,150 for heads of household in 2026, more if you are 65 or older or blind.
- Tax bracket
- A range of taxable income taxed at one rate. In 2026 federal income tax has 7 brackets, from 10% to 37%, and each rate applies only to the income inside its bracket.
Frequently asked questions
What is taxable income?
The part of your income that the federal tax brackets apply to: adjusted gross income minus the standard deduction (or itemized deductions) and other deductions such as the qualified business income deduction.
How do I calculate taxable income?
Add up your income, subtract adjustments such as IRA or HSA contributions to get AGI, then subtract the standard deduction ($16,100 single, $32,200 married filing jointly in 2026) or your itemized deductions, and any other deductions you qualify for.
How much of a $75,000 salary is taxable?
For a single filer with no other income or deductions, $75,000 − $16,100 = $58,900 of taxable income in 2026, with federal income tax of $7,670 before credits (10.2% of the salary).
Is taxable income before or after 401(k) contributions?
After. Pre-tax 401(k) contributions are left out of the wages in box 1 of your W-2, so they never enter taxable income. Social Security and Medicare taxes are still due on them.
What income is not taxable?
Examples include gifts and inheritances you receive, municipal bond interest (for federal tax), qualified Roth IRA withdrawals, most child support, and part or all of Social Security benefits for many people.
Sources: IRS, Federal income tax rates and brackets; IRS Rev. Proc. 2025-32; IRS Fact Sheet FS-2025-03, tax deductions for working Americans and seniors; IRS Publication 525, Taxable and Nontaxable Income. Figures come from our tax data files; see the methodology. All terms: tax glossary.