Tax Glossary
Common tax terms explained in plain language.
- Adjusted Gross Income (AGI)
- Total gross income minus specific deductions. Used to determine taxable income.
- Capital Gains
- Profit from the sale of an asset, such as stocks or real estate.
- Deduction
- An expense that can be subtracted from gross income to reduce taxable income.
- Exemption
- An amount that can be subtracted from income for self, spouse, and dependents.
- FICA
- Federal Insurance Contributions Act tax for Social Security and Medicare.
- Itemized Deductions
- Specific expenses that can be deducted from AGI instead of taking the standard deduction.
- Standard Deduction
- A fixed amount that reduces taxable income, available to all taxpayers.
- Tax Credit
- An amount that directly reduces tax liability, dollar for dollar.
- Tax Liability
- The total amount of tax owed to the government.
- Withholding
- Amount of income tax withheld from wages by an employer.