Income Tax Basics

Gross income is the broad starting measure of income before adjustments, deductions, and credits narrow the final tax result.

Core tax terms that explain how income becomes taxable income, how rates apply, and how liability is measured.

Adjusted gross income is gross income after certain allowed adjustments and is a key pivot point for later tax calculations.

Modified adjusted gross income is an adjusted version of AGI used by some tax rules to test eligibility, limits, or phaseouts.

Taxable income is the amount left after relevant adjustments and deductions narrow the income that will actually be taxed.

Tax liability is the amount of tax the return computes before comparing that amount with withholding, credits, and payments.

A tax bracket is a range of taxable income that is taxed at a particular marginal rate under the rate schedule.

The marginal tax rate is the rate that applies to the next dollar of taxable income within the current bracket.

The effective tax rate measures total tax relative to income and shows the overall tax burden rather than the top marginal rate alone.

A dependent is a person a taxpayer may be able to claim for certain tax purposes, affecting credits, filing choices, and other return outcomes.

An exemption is a tax concept that removes or excludes a person, amount, item, or transaction from a particular tax rule or tax calculation.

Personal exemption is the income-tax concept for an exemption amount tied to a taxpayer or qualifying person under the applicable law for the relevant tax year.