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Taxable Income

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Taxable income is all income that is subject to taxation by the Internal Revenue Service (IRS). Although taxable income is the only type of income that is subject to taxation, reporting of non-taxable income may be required by the IRS. Individuals, businesses, charities, non-profits and even government entities have taxable income.

The IRS maintains an exclusive, rather than an inclusive, definition of taxable income. That is, all income is taxable income unless otherwise stated in the Internal Revenue Code. Some common examples of non-taxable income for individuals are:

- Gifts
- Bequests
- Inheritances
- Cash rebates
- Travel expenses
- Legal compensation
- Adoption reimbursements

The IRS cites the following as examples of taxable income for individuals and businesses:

- Payments from employers
- Revenues from customers
- Rent payment from tenants
- Cash windfalls
- Fringe benefits
- Royalties

The specific definition of taxable income changes from year to year as the Internal Revenue Code is updated through legislation or executive order.



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