Josh Scandlen Podcast

The single most important thing to understand about the U.S. tax code is the difference between gross income and taxable income.  Let’s introduce John and Judy.  They have $100,000 in gross income. What do you think their tax bracket is? Most people will see a married couple with $100,000 income and think they are in the 22% tax bracket.  But that is incorrect.  Taxable Income vs. Gross Income Your federal tax bracket is actually based on your taxable income not your gross income. Taxable income is the net amount you have after you take the various deductions and/or exemptions that are available.  So, let’s assume John and Judy do not itemize their taxes. The only deduction they have is the standard deduction.  Under the new tax bill, (TCJA 2017), tax payers under 65 years old can take $12,000 in standard deductions. Taxpayers 65 and older have a standard deduction of $13,300. Assuming John and Judy are both over 65, they would subtract $26,600 from their $100,000 of gross income