Income Tax Basics

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

Core calculation terms that move a return from income to taxable income, rates, and tax liability.

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

Modified version of AGI used to test eligibility, limits, and phaseouts for certain tax rules and benefits.

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

Tax liability is the tax the return must cover before the final comparison with payments determines a refund or balance due.

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.

Claimable-person status that can affect filing position, credits, and other household-based tax rules.

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.

Earned income is pay or self-employment income from work and drives many filing, credit, and payroll-tax rules.

Unearned income is income not derived from labor, such as interest, dividends, and many capital-gain items.

Ordinary income is income taxed at regular income-tax rates instead of preferential capital-gain rates.

A filing requirement determines whether a taxpayer must file a federal return based on income, status, age, or special tax situations.

The alternative minimum tax is a parallel tax calculation that can increase tax when certain adjustments or preference items apply.

The net investment income tax is an additional tax on certain investment income for taxpayers above the applicable income thresholds.

The qualified business income deduction can reduce taxable income for eligible owners of pass-through businesses.

The federal poverty line is a household-income benchmark used in some tax-credit and health-coverage calculations.

The kiddie tax is the rule that can tax a child's unearned income at the parents' rate once certain limits are exceeded.

Taxable Social Security benefits are the portion of benefits included in gross income when provisional income crosses the applicable thresholds.

Provisional income is the special calculation used to determine whether Social Security benefits become taxable.

A qualified dividend is a dividend that can receive long-term capital-gain rate treatment when the requirements are met.

The capital gain rate is the preferential rate structure used for long-term capital gains and qualified dividends.

The tax table is the IRS lookup table that converts taxable income into regular income tax for many individual returns.