Intuit Academy Tax Practice Exam 2025 – 400 Free Practice Questions to Pass the Exam

Taxable income refers to the amount of income that is subject to taxation after accounting for allowable deductions and exemptions. It is calculated by taking gross income, which includes all sources of income received, and then subtracting deductions such as business expenses, standard deductions, personal exemptions, and other specific allowances.

This calculation provides a more accurate reflection of an individual's financial situation, as it recognizes that not all income is necessarily subject to taxation. Therefore, option C accurately captures this definition, as it represents the process of determining how much of one's income is taxable after adjustments.

Other options do not correctly define taxable income. Including all deductions refers to something broader that does not align with how taxable income is typically calculated. Total income before any deductions does not consider the reductions applicable to taxable income, which is why it doesn’t represent taxable income accurately. Likewise, net income after all taxes are paid describes post-tax earnings rather than the income on which taxes are calculated. Thus, C stands out as the precise representation of taxable income.