Taxable income

The amount left after deductions, on which the rate is charged

In detail

Income minus costs and allowances leaves this figure, and the tax rate applies to it rather than to gross income. Two people with the same income can owe different amounts because their deductions differ. For investing it is the sale price less the acquisition cost and fees.

Example

A sale of $1.2 million less a $1 million cost and $10,000 in fees leaves taxable income of $190,000.

Related terms

Progressive taxation Aggregate versus separate taxation Tax return

Read in the app (App Store)

For learning, not investment advice. Decisions are your own.