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Taxable Income

Taxable income is the portion of your earnings that is subject to federal income tax after subtracting either the standard deduction or itemized deductions. It is not the same as your salary or gross income. The formula is: Taxable Income = Gross Income − Deductions. Tax brackets and rates are applied to this number, not your total earnings.

Example

A single filer earning $90,000 gross income who takes the 2025 standard deduction of $15,750 has a taxable income of $74,250.

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Income Tax Brackets

The U.S. federal income tax uses seven progressive brackets with rates from 10% to 37%. Each bracket rate only applies to the income within that range — not to your entire income.