Financial terms related to taxes, deductions, and tax planning.
The loss from selling an asset for less than its purchase price.
A measure of the average change in prices paid by consumers for goods and services.
A sustained decrease in the general price level of goods and services.
The reduction in an asset's value over time allocated as an expense in accounting.
Total income before taxes, deductions, and other expenses.
The rate at which the general level of prices rises over time, reducing purchasing power.
Specific deductible expenses listed on Schedule A, such as mortgage interest and donations.
Profits from selling assets held for more than one year, taxed at lower rates.
The tax rate applied to your next dollar of income in the progressive tax system.
Total income after taxes, deductions, and expenses—your "take-home" amount.
A dividend taxed at capital gains rates rather than ordinary income rates.
A flat amount reducing taxable income, claimed instead of itemizing deductions.
A range of income taxed at a specific marginal rate in the progressive tax system.
An expense that reduces taxable income, lowering the amount of tax owed.
Selling losing investments to offset capital gains and reduce tax liability.
A legal limit on the total debt the U.S. government can borrow.
Federal payroll tax that funds Social Security and Medicare. Employees pay 7.65% of wages; employers match it.
The Social Security portion of FICA — 6.2% on wages up to an annual cap, matched by your employer.
Your total income minus specific "above-the-line" adjustments — the starting point for figuring federal income tax.
Total tax paid divided by total income — your true average tax rate, usually well below your marginal bracket.
Employer account that lets you set aside pre-tax dollars for medical or dependent-care expenses, with a use-it-or-lose-it rule.
Company shares granted to an employee that vest over time and are taxed as ordinary income when they vest.
A tax-advantaged employee stock option that can qualify for long-term capital gains treatment if holding rules are met.
A workplace plan that lets you buy company stock at a discount (often 15%) through after-tax payroll deductions.
Money deducted from your paycheck before income taxes are calculated, lowering your taxable income today.
Money taken from your paycheck after taxes have already been calculated and withheld.