Taxable income is the amount of an individual's or business' income that is subject to income tax. It is calculated by taking total income and subtracting any allowable deductions and exemptions. The resulting amount is what is used to calculate the amount of tax that the individual or business must pay.

For individuals, taxable income typically includes wages, salaries, tips, and other forms of compensation, as well as interest income, dividends, and capital gains from investments. It also includes business income for self-employed individuals. Certain types of income, such as municipal bond interest and certain social security benefits, may be tax-free.

For businesses, taxable income is typically calculated as the total revenue from the business minus any allowable business expenses such as cost of goods sold, wages, rent, and utilities. The business may also be able to take advantage of tax deductions and credits such as research and development credit and depreciation.

The tax rate applied to taxable income can vary depending on the individual's or business' total income and can be progressive, meaning that the tax rate increases as the income increases. Tax laws and rates can vary by country and by state within a country, so it is important to consult with a tax professional or consult the relevant tax laws in your jurisdiction to determine the specific tax rate that applies to your taxable income.