Which term refers to the income that is subject to taxation?

The term that refers to the income subject to taxation is Taxable Income. Taxable income is defined as the amount of income that is actually subject to tax after all deductions and exemptions have been applied. This means it encompasses all sources of income an individual or entity has received, minus any allowable deductions that the IRS permits under tax law.

In contrast, Gross Income includes all income received before any deductions or adjustments, which means it is broader than Taxable Income. Exempt Income refers to income that is not subject to taxation at all, such as certain employee benefits or municipal bond interest. Net Income generally refers to the income left after all expenses have been deducted; however, it may not directly represent what is taxable, as certain deductions may differ for tax purposes.

Taxable Income is specifically important for determining the correct amount of tax owed, making it a critical concept within taxation.