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Tax GlossaryIndividual Tax
What Is a “Refundable tax credit”?
A refundable tax credit is a type of tax benefit that can reduce your tax liability to zero and allow...
Tax GlossaryIndividual Tax
What Is a Tax Credit?
A tax credit is a dollar-for-dollar reduction of the actual income tax you owe to the IRS. Unlike a deduction,...
Tax GlossaryIndividual Tax
What Is “Tax deduction”?
A tax deduction is an eligible expense or a government-approved dollar amount that you can subtract from your gross income...
Tax GlossaryIndividual Tax
What Is “Adjustment to income”?
An adjustment to income is an expense you can subtract directly from your total gross income to calculate your Adjusted...
Tax GlossaryIndividual Tax
What Is “Above-the-line deduction”?
An above-the-line deduction is a tax deduction you can claim to lower your Adjusted Gross Income (AGI) before you choose...
Tax GlossaryIndividual Tax
What Is “Itemized deductions”?
Itemized deductions are eligible personal expenses that the IRS allows you to list individually on your tax return to reduce...
Tax GlossaryIndividual Tax
What Is “Standard deduction”?
The standard deduction is a fixed dollar amount that the IRS allows you to subtract from your income to reduce...
Tax GlossaryIndividual Tax
What Is “Progressive tax system”?
A progressive tax system is a tax structure where the tax rate increases as a taxpayer’s taxable income increases. Under...
Tax GlossaryIndividual Tax
What Is “Effective tax rate”?
Your effective tax rate is the actual average percentage of your income that you pay in taxes. It is calculated...
Tax GlossaryIndividual Tax
What Is “Marginal tax rate”?
Your marginal tax rate is the tax rate applied to the very last dollar of your taxable income. Because the...