Plain-English definitions for the terms you'll encounter on your financial journey.
Your total gross income minus specific subtractions like student loan interest or retirement contributions. It is used as the starting point for calculating your final tax liability.
Adjusted Gross Income is your total yearly earnings from all sources minus specific deductions like contributions to a retirement plan, which is the final number the government uses to calculate your actual tax bill.
Costs incurred in the operation of a business that can be subtracted from gross income to arrive at taxable business profit.
The percentage of a borrower's monthly gross income that goes toward paying monthly debts.
A personal finance measure that compares an individual’s monthly debt payments to their monthly gross income.
The total amount of money earned from all sources before taxes or other deductions are taken out.
Specific expenses allowed by the IRS that can be subtracted from your adjusted gross income to reduce your tax bill.
Modified Adjusted Gross Income: This is essentially your total income after certain tax deductions have been subtracted, which the government uses to decide if you qualify for specific tax breaks or benefits. You can think of it as your 'official' income level for tax purposes, adjusted for things like student loan interest or retirement contributions.
An expense that can be subtracted from a taxpayer's gross income to reduce the amount of income subject to taxation.