Definition
The part of your income that federal income tax is actually figured on: AGI minus your standard or itemized deductions.
What it means
Taxable income is what remains after you subtract deductions from your adjusted gross income. Most filers subtract the standard deduction; others itemize. For tax years 2025 through 2028, some people can also subtract new deductions, such as those for qualified tips, overtime pay, car loan interest and the extra deduction for people 65 and older, and some business owners can take the qualified business income deduction. The tax brackets are then applied to taxable income. Taxable income is often much lower than your salary, which is one reason your tax bill is usually a smaller percentage of income than your top bracket suggests. Credits, such as the child tax credit, are subtracted later from the tax itself, not from taxable income.
Example
A single filer with an AGI of $54,500 who takes the 2026 standard deduction of $16,100 has taxable income of $38,400 and federal income tax of about $4,360 before credits.
Illustrative numbers only. Your situation will differ.