Taxable income
Assessable income minus deductions — what tax is actually on.
Taxable income is your assessable income (everything you must declare — wages, business income, interest, capital gains) minus your allowable deductions. It’s the number your income tax and Medicare levy are actually calculated on, and it’s almost always lower than what you earned.
Worked example
You invoice $90,000, earn $500 of bank interest, and have $15,000 of deductible expenses. Assessable income is $90,500; taxable income is $75,500. Tax is worked out on the $75,500.
Common mistake
Quoting turnover when asked for income. Turnover is what came in; taxable income is what’s left after legitimate deductions — the difference can be tens of thousands.
Grounded in ATO guidance. Figures last checked . General information, not tax advice.
Related terms
Tax deduction vs tax offset
A deduction lowers income taxed; an offset lowers tax owed.
Marginal tax rate
The tax rate on your next dollar of income.
GST turnover ($75,000 threshold)
The gross income figure that triggers GST registration.
Tax-free threshold
The first $18,200 of income you can earn tax-free.
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Questions about this term
Taxable income: common questions
- Is taxable income the same as what I earned?
- No — it is almost always lower. Taxable income is your assessable income (everything you must declare) minus your allowable deductions. Invoice $90,000, earn $500 of interest and have $15,000 of deductible expenses: assessable income is $90,500, taxable income is $75,500, and tax is worked out on the $75,500.
- Should I give my turnover when a form asks for my income?
- Usually not — turnover is what came in, and taxable income is what is left after legitimate deductions. The two can differ by tens of thousands, so quoting turnover overstates what you are taxed on. Taxable income is the figure income tax and the Medicare levy are actually calculated on.
- What counts as assessable income?
- Everything you must declare: wages, business income, interest and capital gains. Deductions then come off assessable income to give taxable income. The income tax calculator on this site takes the taxable figure and shows the tax on it, so the deductions need to be taken off first.
- Does interest on my savings count as income for tax?
- Yes — bank interest is assessable income and goes into the total before deductions. In the worked example, $500 of interest sits alongside $90,000 of invoices, so assessable income is $90,500 before the $15,000 of expenses comes off.
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