A fuller guide to this term is on the way. In the meantime, the related terms below explain the ideas around it.
Related MoneyPedia terms
- Gross IncomeYour total earnings before any taxes, retirement contributions, or other deductions are taken out of your paycheck.
- Taxable IncomeThe portion of your income left after deductions that the government actually applies tax rates to.
- Tax DeductionAn expense you can subtract from your income to lower the amount that gets taxed.
- Tax CreditA dollar-for-dollar reduction of the tax you owe, making it more valuable than a deduction of the same size.
- Earned Income Tax Credit (EITC)A refundable credit for low-to-moderate income workers that grows with earnings up to a limit, then phases out.
More in Taxes
Plain-English education — not personalized legal, tax, or investment advice.