US Tax Glossary 2026

91 core terms with links to related calculators. More entries will follow; this starter set covers the vocabulary that shows up most often in 2026 planning.

Income & filing 14 terms

• Adjusted Gross Income (AGI) Your total income minus specific “above-the-line” adjustments. AGI is the starting point for many credits, deduction phaseouts, and Medicare IRMAA brackets.
• Modified Adjusted Gross Income (MAGI) AGI with certain amounts added back. MAGI definitions differ by credit or program (Roth IRA eligibility, Premium Tax Credit, IRMAA, and others).
• Taxable Income The amount of income that remains after subtracting deductions from AGI. Ordinary tax brackets apply to taxable income, not to gross pay.
• Filing Status How you file your return—Single, Married Filing Jointly, Married Filing Separately, Head of Household, or Qualifying Surviving Spouse. Status sets bracket widths and standard deduction amounts.
• Dependent A qualifying child or relative you claim on your return. Dependents affect credits such as the Child Tax Credit and can change Head of Household eligibility.
• Marginal Tax Rate The rate that applies to your next dollar of ordinary taxable income. It is not the same as the share of income you actually pay in tax.
• Effective Tax Rate Total tax divided by a chosen income base (often AGI or taxable income). It reflects the blended result of brackets, deductions, and credits.
• Alternative Minimum Tax (AMT) A parallel tax system with its own exemption and rates. You pay the higher of regular tax or AMT. Incentive stock options and large itemized preferences can trigger it.
• SNAP Net Income Gross income minus allowable SNAP deductions (earned income exclusion, standard deduction, dependent care, shelter excess, and others). Benefits are generally based on net income.
• Form 1099-NEC Reports nonemployee compensation paid to independent contractors. Receiving a 1099-NEC does not by itself decide worker classification, but it signals income that may need SE tax and estimates.
• OBBBA (One Big Beautiful Bill Act) Major 2025 tax legislation referenced in IRS inflation adjustments for 2026, including permanence and modifications related to TCJA-era individual provisions.
• Form 1099-K An information return payment settlement entities issue for certain card and third-party network transactions. Reporting thresholds have changed in recent years; tax is still owed on net profit even without a form.
• Kiddie Tax Rules that can tax a child’s unearned income at parental rates once it exceeds a threshold, reducing the benefit of shifting investment income to minors.
• AMT Exemption A large exemption subtracted when computing alternative minimum taxable income. It phases out at higher AMTI levels. For 2026 the IRS set $90,100 single and $140,200 joint (phaseout starts higher).

Deductions 15 terms

• Standard Deduction A fixed dollar amount you subtract from AGI if you do not itemize. For 2026, the IRS inflation-adjusted amounts are $16,100 single, $24,150 head of household, and $32,200 married filing jointly.
• Itemized Deduction Specific expenses—such as mortgage interest, charitable gifts, medical costs above an AGI floor, and SALT—reported on Schedule A when they exceed the standard deduction.
• SALT Deduction State and local tax deduction on Schedule A for income, sales, and property taxes, subject to federal cap and phaseout rules that can change by tax year.
• Qualified Business Income (QBI) Income from a qualified trade or business that may qualify for the Section 199A deduction—generally up to 20% of QBI, with wage, property, and taxable-income limits.
• Schedule C The form sole proprietors and single-member LLCs use to report business income and expenses. Net profit feeds Form 1040 and self-employment tax on Schedule SE.
• Section 179 An election to expense qualifying business property in the year placed in service, up to an annual dollar limit and taxable-income limit, instead of depreciating over time.
• Bonus Depreciation An additional first-year depreciation allowance on qualifying property. The allowable percentage depends on the year the asset is placed in service and current law.
• Specified Service Trade or Business (SSTB) Certain service businesses (health, law, consulting, financial services, and others listed in the regulations) face tighter Section 199A phaseouts once taxable income exceeds the threshold.
• Standard Mileage Rate IRS cents-per-mile rate that can be used instead of actual vehicle expenses for deductible business miles, subject to eligibility rules.
• Itemized Deductions Deductions listed on Schedule A—such as certain taxes, mortgage interest, charity, and medical expenses above an AGI floor—taken instead of the standard deduction.
• SALT Cap The dollar limit on how much state and local tax (income or sales, plus property tax) you can claim as an itemized deduction on Schedule A.
• Home Office Simplified Method An optional safe-harbor deduction of $5 per square foot of exclusive business use, capped at 300 square feet, instead of allocating actual home expenses on Form 8829.
• Mill Rate A local property-tax rate expressed as mills, where one mill equals $1 of tax per $1,000 of taxable assessed value.
• Acquisition Indebtedness Mortgage debt used to buy, build, or substantially improve a qualified residence. Interest deductibility is limited to $750,000 of such debt for many post-TCJA loans ($375,000 MFS).
• QBI Taxable-Income Threshold The taxable-income level where Section 199A wage/property limits and SSTB phaseouts begin. Below the threshold, the 20% QBI deduction is generally available without those limits.

Credits 12 terms

• Child Tax Credit (CTC) A credit for each qualifying child under the age limit. Part may be refundable as the Additional Child Tax Credit when tax liability is low.
• Earned Income Tax Credit (EITC) A refundable credit for workers with earned income below IRS thresholds. The amount rises with qualifying children and then phases out as income increases.
• Advance Premium Tax Credit Monthly subsidy paid to your marketplace insurer based on estimated income. You reconcile it on Form 8962 when you file; excess advances can create repayment.
• Benchmark Marketplace Plan Usually the second-lowest-cost Silver plan (SLCSP) used to compute the Premium Tax Credit for your rating area and household.
• Clean Vehicle Credit (Cutoff) Former new/used clean vehicle credits that generally ended for vehicles acquired after September 30, 2025. Later claims often turn on acquisition timing and grandfathering facts.
• Additional Child Tax Credit (ACTC) The refundable portion of the Child Tax Credit when the nonrefundable credit exceeds tax liability, subject to earned-income formulas and limits.
• American Opportunity Tax Credit An education credit of up to $2,500 per eligible student for the first four years of postsecondary education, with a partially refundable slice and MAGI phaseouts.
• Saver's Credit A nonrefundable credit (Form 8880) of 10%, 20%, or 50% of eligible retirement contributions, subject to AGI limits and a contribution base cap.
• Form 8962 The form used to reconcile advance premium tax credits with the Premium Tax Credit you actually qualify for based on annual household income and coverage months.
• Lifetime Learning Credit An education credit equal to 20% of up to $10,000 of qualified expenses per return, with MAGI phaseouts. Unlike AOTC, it is not limited to the first four years of postsecondary education.
• Child and Dependent Care Credit A credit for work-related care expenses for a qualifying person, historically using a percentage of expenses up to $3,000 (one person) or $6,000 (two or more) under classic Form 2441 rules.
• Adoption Credit A credit for qualified adoption expenses up to an inflation-adjusted maximum, with MAGI phaseouts. Special-needs adoptions may allow the maximum even with lower expenses.

Payroll & withholding 11 terms

• FICA Federal Insurance Contributions Act taxes: Social Security (6.2% employee) and Medicare (1.45% employee), plus Additional Medicare Tax above wage thresholds.
• Social Security Wage Base The maximum wages subject to the 6.2% Social Security tax each year. For 2026 the SSA wage base is $184,500; Medicare has no wage base.
• Medicare Tax The 1.45% Hospital Insurance tax on wages and self-employment income. Unlike Social Security tax, Medicare tax has no annual wage ceiling.
• Additional Medicare Tax An extra 0.9% Medicare tax on wages, compensation, and self-employment income above $200,000 single / $250,000 married filing jointly (thresholds are not inflation-indexed).
• Withholding Income tax your employer remits from each paycheck based on Form W-4. Withholding is a prepayment toward your annual liability, not the final tax itself.
• Estimated Tax Quarterly payments (Form 1040-ES) for income not covered by withholding—common for freelancers, investors, and people with large bonuses or side income.
• Estimated Tax Safe Harbor A way to avoid underpayment penalties by paying a required percentage of last year’s tax (often 100% or 110% for higher AGI) or 90% of the current year’s tax through withholding and estimates.
• Supplemental Wages Bonuses, commissions, overtime in some payroll systems, and similar payments that may use optional flat-rate federal withholding methods instead of regular wage tables.
• Form W-4 Employee withholding certificate used by employers to calculate federal income tax withholding. Steps cover filing status, multiple jobs, dependents, and other adjustments.
• Schedule SE Computes Social Security and Medicare taxes on self-employment earnings, generally on 92.35% of net profit, with a deduction for one-half of SE tax.
• Reasonable Compensation (S Corp) The wages an S corporation must pay shareholder-employees for services before treating remaining profits as distributions. Underpaying wages to avoid payroll tax is a common audit issue.

Retirement & health 14 terms

• 401(k) An employer-sponsored retirement plan. Traditional elective deferrals reduce taxable wages; Roth 401(k) contributions are after-tax. The 2026 elective deferral limit is $24,500 under age 50.
• Traditional IRA An individual retirement account that may allow deductible contributions. Deductibility phases out when you (or your spouse) are covered by a workplace plan and MAGI exceeds IRS limits.
• Roth IRA An IRA funded with after-tax dollars. Qualified withdrawals of contributions and earnings are tax-free. Direct contributions phase out at higher MAGI levels.
• Health Savings Account (HSA) A tax-advantaged account paired with a high-deductible health plan. Contributions can be pre-tax or deductible, growth is tax-deferred, and qualified medical withdrawals are tax-free.
• Required Minimum Distribution (RMD) The annual amount you must withdraw from most traditional retirement accounts after reaching the RMD age. Missing an RMD can trigger an excise tax on the shortfall.
• Provisional Income The formula used to test how much of your Social Security benefits are taxable: AGI + nontaxable interest + half of Social Security benefits.
• IRMAA Income-Related Monthly Adjustment Amount—higher Medicare Part B and Part D premiums based on MAGI from two years earlier.
• Uniform Lifetime Table IRS life-expectancy table used by many account owners to compute required minimum distributions. A different table applies when a spouse beneficiary is more than 10 years younger.
• Catch-Up Contribution Extra elective deferral allowed for participants age 50 or older (with a higher SECURE 2.0 amount for ages 60–63 when the plan permits).
• IRA Pro-Rata Rule When you convert or distribute from traditional IRAs that include nondeductible basis, the taxable portion is generally prorated across all non-Roth IRA balances.
• Backdoor Roth IRA A planning sequence of nondeductible traditional IRA contributions followed by conversion to Roth, used when MAGI blocks direct Roth contributions. The pro-rata rule can tax part of the conversion.
• Mega Backdoor Roth After-tax 401(k) contributions (beyond elective deferrals) that are converted or rolled to Roth, limited by the §415 annual additions cap and plan design.
• SEP-IRA A Simplified Employee Pension IRA funded by employer contributions (including self-employed “employer” contributions), with limits tied to compensation and annual additions rules.
• Solo 401(k) A 401(k) for a business with no employees other than a spouse, combining employee elective deferrals and employer profit-sharing in one plan.

Investment 16 terms

• Capital Gain Profit from selling a capital asset for more than your basis. Gains are short-term or long-term based on holding period and taxed under different rate schedules.
• Short-Term Capital Gain Gain on assets held one year or less. Short-term gains are taxed as ordinary income at your marginal rate.
• Long-Term Capital Gain Gain on assets held more than one year. Preferential 0%, 15%, or 20% rates generally apply, and NIIT may add 3.8% for higher-income taxpayers.
• Basis Your cost in an asset for tax purposes—usually purchase price plus certain adjustments. Gain or loss equals amount realized minus adjusted basis.
• Wash Sale A rule that disallows a loss when you buy substantially identical securities within 30 days before or after the sale. The disallowed loss is added to the basis of the replacement shares.
• Net Investment Income Tax (NIIT) A 3.8% tax on the lesser of net investment income or the excess of MAGI over $200,000 single / $250,000 married filing jointly.
• Cost Basis Generally what you paid for an asset, adjusted for commissions, improvements, return of capital, and wash-sale adjustments. Gain or loss starts from basis.
• Qualified Dividend A dividend that meets holding-period and payer rules and is taxed at long-term capital gains rates (0%, 15%, or 20%) instead of ordinary rates.
• Net Investment Income Generally interest, dividends, capital gains, rental and passive income (with modifications) that feed the 3.8% Net Investment Income Tax when MAGI exceeds statutory thresholds.
• Incentive Stock Option (ISO) A statutory stock option that can qualify for preferential capital-gains treatment if holding periods are met. The bargain element at exercise is generally an AMT preference item.
• Nonqualified Stock Option (NSO) A stock option that is not an ISO. The bargain element at exercise is generally ordinary wage income subject to withholding.
• Restricted Stock Unit (RSU) A promise to deliver shares (or cash) after vesting. Fair market value at vest is generally ordinary income; later sale creates capital gain or loss from that basis.
• Employee Stock Purchase Plan (ESPP) A plan allowing employees to buy company stock at a discount. Qualifying vs disqualifying dispositions change how much of the discount is ordinary income versus capital gain.
• Qualified Small Business Stock (QSBS) C-corporation stock that may qualify for Section 1202 exclusion of gain (often 50%, 75%, or 100% depending on acquisition date) if holding period and active-business tests are met.
• Section 83(b) Election An election to include the grant-date spread on substantially nonvested property in income within 30 days of transfer, starting the capital-gains clock earlier and risking forfeiture with no refund of tax paid.
• Tax-Loss Harvesting Selling investments at a loss to offset capital gains, with up to $3,000 ($1,500 MFS) of net loss deductible against ordinary income annually and the rest carried forward.

International 6 terms

• Foreign Earned Income Exclusion (FEIE) An exclusion for qualifying foreign earned income claimed on Form 2555 if you meet the bona fide residence or physical presence test. The exclusion amount is inflation-adjusted each year.
• FBAR Report of Foreign Bank and Financial Accounts (FinCEN Form 114). Required when the aggregate value of foreign financial accounts exceeds $10,000 at any time during the year.
• Landed Cost The total cost to get imported goods to your door or warehouse: goods value plus freight, insurance, duties, fees, and related charges.
• Foreign Tax Credit A credit for foreign income taxes paid or accrued, generally limited to the U.S. tax on foreign-source income (Form 1116 baskets and carryovers apply).
• Physical Presence Test An FEIE eligibility test generally requiring 330 full days in a foreign country or countries during any 12 consecutive months.
• Bona Fide Residence Test An FEIE eligibility test based on facts and circumstances showing you are a bona fide resident of a foreign country for an uninterrupted period that includes a full tax year.

Estate & gift 3 terms

• Estate Tax Exemption The basic exclusion amount that generally shelters estates from federal estate tax. Unused exclusion may be portable to a surviving spouse when a proper election is made.
• Gift Tax Annual Exclusion The amount you can give each recipient each year without using lifetime exemption or filing a gift tax return for that gift. The exclusion is inflation-adjusted.
• DSUE Portability Deceased spousal unused exclusion that a surviving spouse may add to their own basic exclusion when a proper portability election is made on a timely Form 706.

Looking for year-over-year figures? See 2025 vs 2026 tax changes.