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Taxable Income

Taxable income is the amount of income a taxpayer uses to calculate tax liability.  Another way of phrasing it would be to say that taxable income is the portion of a taxpayer's income that is subject to taxation.  Not all of a trucker's gross income is taxed.  Various above-the-line deductions and below-the-line deductions affect gross income, thus making taxable income lower.  In the case of truck drivers, employee business expenses for trucking employees are helpful in lowering taxable income and tax liability.

Taxable income is the income amount used in determining tax liability via tax rate tables for a given tax bracket.  If taxable income is too low compared to gross income (meaning the taxpayer had many write-offs and itemized deductions), it is possible that the taxpayer could be subject to the AMT (Alternative Minimum Tax), which affects higher income individuals with many deductions.

Unless the AMT applies, taxable income is related to adjusted gross income as follows:

Adjusted Gross Income - Below-the-Line Deductions = Taxable Income


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