What is taxable income defined as?

The correct definition of taxable income is the amount of income that is subject to taxation, which is essentially the total income earned by an individual minus the allowable deductions and exemptions.

While the capital gains refer specifically to the profit earned from the sale of an asset, taxable income encompasses various types of income, including wages, salaries, interest, dividends, and capital gains, after adjustments. This means that taxable income reflects the portion of total income upon which an individual is required to pay tax.

It's important to understand that other choices do not accurately encompass the full definition of taxable income; for instance, total income covers all aspects of earnings, while deductions represent expenses that can reduce taxable income but do not define what taxable income itself is. Similarly, income not subject to taxation is simply exempt and does not fall under the category of taxable income, making these options misleading concerning the comprehensive definition of taxable income.