Internal Revenue Code:Sec. 63. Taxable income defined
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Contents |
Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART I - DEFINITION OF GROSS INCOME, ADJUSTED GROSS INCOME, TAXABLE
INCOME, ETC.
Statute
Sec. 63. Taxable income defined
(a) In general
Except as provided in subsection (b), for purposes of this
subtitle, the term ''taxable income'' means gross income minus the
deductions allowed by this chapter (other than the standard
deduction).
(b) Individuals who do not itemize their deductions
In the case of an individual who does not elect to itemize his
deductions for the taxable year, for purposes of this subtitle, the
term ''taxable income'' means adjusted gross income, minus -
(1) the standard deduction, and
(2) the deduction for personal exemptions provided in section 151.
(c) Standard deduction
For purposes of this subtitle -
(1) In general
Except as otherwise provided in this subsection, the term
''standard deduction'' means the sum of -
(A) the basic standard deduction, and
(B) the additional standard deduction.
(2) Basic standard deduction.--For purposes of paragraph (1),
the basic standard deduction is--
(A) 200 percent of the dollar amount in effect
under subparagraph (C) for the taxable year in the case of--
(i) a joint return, or
(ii) a surviving spouse (as defined in
section 2(a)),
(B) $4,400 in the case of a head of household (as
defined in section 2(b)), or
(C) $3,000 in any other case.
(3) Additional standard deduction for aged and blind
For purposes of paragraph (1), the additional standard
deduction is the sum of each additional amount to which the
taxpayer is entitled under subsection (f).
(4) Adjustments for inflation
In the case of any taxable year beginning in a calendar year
after 1988, each dollar amount contained in paragraph (2))B),
(2)(C), or (5) or subsection (f) shall be increased by an amount
equal to -
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section
1(f)(3) for the calendar year in which the taxable year begins,
by substituting for ''calendar year 1992'' in subparagraph (B)
thereof -
(i) ''calendar year 1987'' in the case of the dollar
amounts contained in paragraph (2)(B), (2)(C), or (5)(A) or
subsection (f), and
(ii) ''calendar year 1997'' in the case of the dollar
amount contained in paragraph (5)(B).
(5) Limitation on basic standard deduction in the case of certain
dependents
In the case of an individual with respect to whom a deduction
under section 151 is allowable to another taxpayer for a taxable
year beginning in the calendar year in which the individual's
taxable year begins, the basic standard deduction applicable to
such individual for such individual's taxable year shall not
exceed the greater of -
(A) $500, or
(B) the sum of $250 and such individual's earned income.
(6) Certain individuals, etc., not eligible for standard
deduction
In the case of -
(A) a married individual filing a separate return where
either spouse itemizes deductions,
(B) a nonresident alien individual,
(C) an individual making a return under section 443(a)(1) for
a period of less than 12 months on account of a change in his
annual accounting period, or
(D) an estate or trust, common trust fund, or partnership,
the standard deduction shall be zero.
(d) Itemized deductions
For purposes of this subtitle, the term ''itemized deductions''
means the deductions allowable under this chapter other than -
(1) the deductions allowable in arriving at adjusted gross
income, and
(2) the deduction for personal exemptions provided by section
151.
(e) Election to itemize
(1) In general
Unless an individual makes an election under this subsection
for the taxable year, no itemized deduction shall be allowed for
the taxable year. For purposes of this subtitle, the
determination of whether a deduction is allowable under this
chapter shall be made without regard to the preceding sentence.
(2) Time and manner of election
Any election under this subsection shall be made on the
taxpayer's return, and the Secretary shall prescribe the manner
of signifying such election on the return.
(3) Change of election
Under regulations prescribed by the Secretary, a change of
election with respect to itemized deductions for any taxable year
may be made after the filing of the return for such year. If the
spouse of the taxpayer filed a separate return for any taxable
year corresponding to the taxable year of the taxpayer, the
change shall not be allowed unless, in accordance with such
regulations -
(A) the spouse makes a change of election with respect to
itemized deductions, for the taxable year covered in such
separate return, consistent with the change of treatment sought
by the taxpayer, and
(B) the taxpayer and his spouse consent in writing to the
assessment (within such period as may be agreed on with the
Secretary) of any deficiency, to the extent attributable to
such change of election, even though at the time of the filing
of such consent the assessment of such deficiency would
otherwise be prevented by the operation of any law or rule of
law.
This paragraph shall not apply if the tax liability of the
taxpayer's spouse for the taxable year corresponding to the
taxable year of the taxpayer has been compromised under section
7122.
(f) Aged or blind additional amounts
(1) Additional amounts for the aged
The taxpayer shall be entitled to an additional amount of $600
-
(A) for himself if he has attained age 65 before the close of
his taxable year, and
(B) for the spouse of the taxpayer if the spouse has attained
age 65 before the close of the taxable year and an additional
exemption is allowable to the taxpayer for such spouse under
section 151(b).
(2) Additional amount for blind
The taxpayer shall be entitled to an additional amount of $600
-
(A) for himself if he is blind at the close of the taxable
year, and
(B) for the spouse of the taxpayer if the spouse is blind as
of the close of the taxable year and an additional exemption is
allowable to the taxpayer for such spouse under section 151(b).
For purposes of subparagraph (B), if the spouse dies during the
taxable year the determination of whether such spouse is blind
shall be made as of the time of such death.
(3) Higher amount for certain unmarried individuals
In the case of an individual who is not married and is not a
surviving spouse, paragraphs (1) and (2) shall be applied by
substituting ''$750'' for ''$600''.
(4) Blindness defined
For purposes of this subsection, an individual is blind only if
his central visual acuity does not exceed 20/200 in the better
eye with correcting lenses, or if his visual acuity is greater
than 20/200 but is accompanied by a limitation in the fields of
vision such that the widest diameter of the visual field subtends
an angle no greater than 20 degrees.
(g) Marital status
For purposes of this section, marital status shall be determined
under section 7703.
Sources
(Aug. 16, 1954, ch. 736, 68A Stat. 18; Pub. L. 95-30, title I, Sec.
102(a), May 23, 1977, 91 Stat. 135; Pub. L. 95-600, title I, Sec.
101(b), Nov. 6, 1978, 92 Stat. 2769; Pub. L. 97-34, title I, Sec.
104(b), 111(b)(4), 121(b), (c)(2), Aug. 13, 1981, 95 Stat. 189,
194, 196, 197; Pub. L. 99-514, title I, Sec. 102(a), title XII,
Sec. 1272(d)(6), Oct. 22, 1986, 100 Stat. 2099, 2594; Pub. L.
100-647, title I, Sec. 1001(b)(1), Nov. 10, 1988, 102 Stat. 3349;
Pub. L. 101-508, title XI, Sec. 11101(d)(1)(D), 11801(a)(4), Nov.
5, 1990, 104 Stat. 1388-405, 1388-520; Pub. L. 103-66, title XIII,
Sec. 13201(b)(3)(D), Aug. 10, 1993, 107 Stat. 459; Pub. L. 105-34,
title XII, Sec. 1201(a), Aug. 5, 1997, 111 Stat. 993; Pub. L.
107-16, title III, Sec. 301(a), (b), (c)(2), June 7, 2001, 115
Stat. 53, 54.)
Amendment of Section
STANDARD DEDUCTION ADJUSTMENTS FOR TAX YEARS BEGINNING IN 2002
For adjustment of standard deduction, limitation on standard
deduction, and additional amounts under subsecs. (c)(2), (5) and
(f) of this section for tax years beginning in 2002, see section
3.07 of Revenue Procedure 2001-59, set out as a note under
section 1 of this title.
AMENDMENTS
2004 - Pub. L. 108-311, Sec. 101(b), amended Subsec. (c)
for Basic Standard Deduction. The amendments made to
this section shall apply to taxable years beginning after
December 31, 2003.
2003 - Subsec. (c)(7). Pub. L. 108-27, Sec. 103(a) amended
for taxable years 2003 and 2004.
AMENDMENT OF SUBSECTION (C)
2002 - Pub. L. 107-147, Sec 411(e)(1) & (2) Provided for
Section 63(c)(2) to be amended--
- in subparagraph (A), by striking ``subparagraph
(C)'' and inserting ``subparagraph (D)'',
- by striking ``or'' at the end of subparagraph (B),
- by redesignating subparagraph (C) as subparagraph (D),
- by inserting after subparagraph (B) the
following new subparagraph:
(C) one-half of the amount in effect under
subparagraph (A) in the case of a married individual
filing a separate return, or'',
- by inserting the following flush sentence at the end:
If any amount determined under subparagraph (A) is not
a multiple of $50, such amount shall be rounded to the
next lowest multiple of $50.''.
Section 63(c)(4) is amended by striking ``paragraph
(2) or (5)'' and inserting ``paragraph (2)(B), (2)(D), or (5)''.
Section 63(c)(4)(B)(i) is amended by striking
``paragraph (2)'' and inserting ``paragraph (2)(B), (2)(D),''.
Section 63(c)(4) is amended by striking the flush sentence at
the end (as added by section 301(c)(2) of Public Law 107-17).
2001 - Pub. L. 107-16, title III, Sec. 301(a), (b), (c)(2), (d), title
IX, Sec. 901, June 7, 2001, 115 Stat. 53, 54, 150, provided that,
applicable to taxable years beginning after Dec. 31, 2004,
subsection (c) of this section is temporarily amended as follows:
(1) in paragraph (2), by substituting ''the applicable
percentage of the dollar amount in effect under subparagraph (C)
for the taxable year'' for ''$5,000'' in subparagraph (A), by
inserting ''or'' at the end of subparagraph (B), by substituting
''in any other case.'' for ''in the case of'' and all that
follows in subparagraph (C), and by striking out subparagraph
(D);
(2) in paragraph (4), by inserting at end the following flush
sentence: ''The preceding sentence shall not apply to the amount
referred to in paragraph (2)(A).''; and
(3) by adding paragraph (7) to read as follows:
(7) Applicable percentage
For purposes of paragraph (2), the applicable percentage shall
be determined in accordance with the following table:
For taxable years beginning The applicable
in calendar year - percentage is -
2005 174
2006 184
2007 187
2008 190
2009 and thereafter 200.
See Effective and Termination Dates of 2001 Amendment note
below.
Miscellaneous
AMENDMENTS
1997 - Subsec. (c)(4). Pub. L. 105-34, Sec. 1201(a)(2), in
introductory provisions, substituted ''(5)'' for ''(5)(A)'' and, in
subpar. (B), substituted ''by substituting for 'calendar year 1992'
in subparagraph (B) thereof - '' for ''by substituting 'calendar
year 1987' for 'calendar year 1992' in subparagraph (B) thereof''
and added cls. (i) and (ii).
Subsec. (c)(5)(B). Pub. L. 105-34, Sec. 1201(a)(1), substituted
''the sum of $250 and such individual's earned income'' for ''such
individual's earned income''.
1993 - Subsec. (c)(4)(B). Pub. L. 103-66 substituted ''1992'' for
''1989''.
1990 - Subsec. (c)(4)(B). Pub. L. 101-508, Sec. 11101(d)(1)(D),
inserted before period at end '', by substituting 'calendar year
1987' for 'calendar year 1989' in subparagraph (B) thereof''.
Subsec. (h). Pub. L. 101-508, Sec. 11801(a)(4), struck out
subsec. (h) ''Transitional rule for taxable years beginning in
1987'' which read as follows: ''In the case of any taxable year
beginning in 1987, paragraph (2) of subsection (c) shall be applied
-
''(1) by substituting '$3,760' for '$5,000',
''(2) by substituting '$2,540' for '$4,400',
''(3) by substituting '$2,540' for '$3,000', and
''(4) by substituting '$1,880' for '$2,500'.
The preceding sentence shall not apply if the taxpayer is entitled
to an additional amount determined under subsection (f) (relating
to additional amount for aged and blind) for the taxable year.''
1988 - Subsec. (c)(5). Pub. L. 100-647 substituted ''basic
standard deduction'' for ''standard deduction'' in heading and
text.
1986 - Subsec. (a). Pub. L. 99-514, Sec. 102(a), substituted ''In
general'' for ''Corporations'' in heading and amended text
generally. Prior to amendment, text read as follows: ''For
purposes of this subtitle, in the case of a corporation, the term
'taxable income' means gross income minus the deductions allowed by
this chapter.''
Subsec. (b). Pub. L. 99-514, Sec. 102(a), substituted
''Individuals who do not itemize their deductions'' for
''Individuals'' in heading and amended text generally. Prior to
amendment, text read as follows: ''For purposes of this subtitle,
in the case of an individual, the term 'taxable income' means
adjusted gross income -
''(1) reduced by the sum of -
''(A) the excess itemized deductions,
''(B) the deductions for personal exemptions provided by
section 151, and
''(C) the direct charitable deduction, and
''(2) increased (in the case of an individual for whom an
unused zero bracket amount computation is provided by subsection
(e)) by the unused zero bracket amount (if any).''
Subsec. (c). Pub. L. 99-514, Sec. 102(a), substituted ''Standard
deduction'' for ''Excess itemized deductions'' in heading and
amended text generally. Prior to amendment, text read as follows:
''For purposes of this subtitle, the term 'excess itemized
deductions' means the excess (if any) of -
''(1) the itemized deductions, over
''(2) the zero bracket amount.''
Subsec. (c)(6)(C) to (E). Pub. L. 99-514, Sec. 1272(d)(6),
redesignated subpars. (D) and (E) as (C) and (D), respectively, and
struck out former subpar. (C) which read as follows: ''a citizen of
the United States entitled to the benefits of section 931 (relating
to income from sources within possessions of the United States),''.
Subsec. (d). Pub. L. 99-514, Sec. 102(a), substituted ''Itemized
deductions'' for ''Zero bracket amount'' in heading and amended
text generally. Prior to amendment, subsec. (d) read as follows:
''For purposes of this subtitle, the term 'zero bracket amount'
means -
''(1) in the case of an individual to whom subsection (a), (b),
(c), or (d) of section 1 applies, the maximum amount of taxable
income on which no tax is imposed by the applicable subsection of
section 1, or
''(2) zero in any other case.''
Subsec. (e). Pub. L. 99-514, Sec. 102(a), substituted ''Election
to itemize'' for ''Unused zero bracket amount'' in heading.
Subsec. (e)(1). Pub. L. 99-514, Sec. 102(a), substituted ''In
general'' for ''Individuals for whom computation must be made'' in
heading and amended text generally. Prior to amendment, text read
as follows: ''A computation for the taxable year shall be made
under this subsection for the following individuals:
''(A) a married individual filing a separate return where
either spouse itemized deductions,
''(B) a nonresident alien individual,
''(C) a citizen of the United States entitled to the benefits
of section 931 (relating to income from sources within
possessions of the United States), and
''(D) an individual with respect to whom a deduction under
section 151(e) is allowable to another taxpayer for a taxable
year beginning in the calendar year in which the individual's
taxable year begins.''
Subsec. (e)(2). Pub. L. 99-514, Sec. 102(a), substituted ''Time
and manner of election'' for ''Computation'' in heading and amended
text generally. Prior to amendment, text read as follows: ''For
purposes of this subtitle, an individual's unused zero bracket
amount for the taxable year is an amount equal to the excess (if
any) of -
''(A) the zero bracket amount, over
''(B) the itemized deductions.
In the case of an individual referred to in paragraph (1)(D), if
such individual's earned income (as defined in section 911(d)(2))
exceeds the itemized deductions, such earned income shall be
substituted for the itemized deductions in subparagraph (B).''
Subsec. (e)(3). Pub. L. 99-514, Sec. 102(a), in amending subsec.
(e) generally, added par. (3).
Subsec. (f). Pub. L. 99-514, Sec. 102(a), substituted ''Aged or
blind additional amounts'' for ''Itemized deductions'' in heading
and amended text generally. Prior to amendment, text read as
follows: ''For purposes of this subtitle, the term 'itemized
deductions' means the deductions allowable by this chapter other
than -
''(1) the deductions allowable in arriving at adjusted gross
income,
''(2) the deductions for personal exemptions provided by
section 151, and
''(3) the direct charitable deduction.''
Subsec. (g). Pub. L. 99-514, Sec. 102(a), amended subsec. (g)
generally, substituting provision that marital status be determined
under section 7703 for provisions relating to election to itemize.
See subsec. (e).
Subsec. (h). Pub. L. 99-514, Sec. 102(a), substituted
''Transitional rule for taxable years beginning in 1987'' for
''Marital status'' in heading and amended text generally. Prior to
amendment, text read as follows: ''For purposes of this section,
marital status shall be determined under section 143.''
Subsec. (i). Pub. L. 99-514, Sec. 102(a), in amending section
generally, struck out subsec. (i), ''Direct charitable deduction'',
which read as follows: ''For purposes of this section, the term
'direct charitable deduction' means that portion of the amount
allowable under section 170(a) which is taken as a direct
charitable deduction for the taxable year under section 170(i).''
1981 - Subsec. (b)(1)(C). Pub. L. 97-34, Sec. 121(b)(1), added
subpar. (C).
Subsec. (d). Pub. L. 97-34, Sec. 104(b), substituted a blanket
reference to individuals to whom subsection (a), (b), (c), or (d)
of section 1 applies and the maximum amount of taxable income on
which no tax is imposed by the applicable subsection of section 1
for provisions specifically referring to amounts of $3,400 in the
case of (A) a joint return under section 6013, or (B) a surviving
spouse (as defined in section 2(a)), $2,300 in the case of an
individual who is not married and who is not a surviving spouse (as
so defined), and $1,700 in the case of a married individual filing
a separate return.
Subsec. (e)(2). Pub. L. 97-34, Sec. 111(b)(4), substituted
''section 911(d)(2)'' for ''section 911(b)'' in provisions
following subpar. (B).
Subsec. (f)(3). Pub. L. 97-34, Sec. 121(c)(2), added par. (3).
Subsec. (i). Pub. L. 97-34, Sec. 121(b)(2), added subsec. (i).
1978 - Pub. L. 95-600 substituted ''$3,400'' for ''$3,200'' in
par. (1), ''$2,300'' for ''$2,200'' in par. (2), and ''$1,700'' for
''$1,600'' in par. (3).
1977 - Pub. L. 95-30 completely revised definition of taxable
income from one using the concept of a standard deduction and
consisting of subsecs. (a) and (b) entitled, respectively,
''General rule'' and ''Individuals electing standard deduction'' to
definition using the concepts of zero bracket amounts and excess
itemized deductions and consisting of subsecs. (a) to (h) entitled,
respectively, ''Corporations'', ''Individuals'', ''Excess itemized
deductions'', ''Zero bracket amount'', ''Unused zero bracket
amount'', ''Itemized deductions'', ''Election to itemize'', and
''Marital status''.
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Amendment by Pub. L. 107-16 applicable to taxable years beginning
after Dec. 31, 2004, see section 301(d) of Pub. L. 107-16, set out
as a note under section 1 of this title.
Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
limitation years beginning after Dec. 31, 2010, and the Internal
Revenue Code of 1986 to be applied and administered to such years
as if such amendment had never been enacted, see section 901 of
Pub. L. 107-16, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1997 AMENDMENT
Amendment by Pub. L. 105-34 applicable to taxable years beginning
after Dec. 31, 1997, see section 1201(c) of Pub. L. 105-34, set out
as a note under section 59 of this title.
EFFECTIVE DATE OF 1993 AMENDMENT
Amendment by Pub. L. 103-66 applicable to taxable years beginning
after Dec. 31, 1992, see section 13201(c) of Pub. L. 103-66, set
out as a note under section 1 of this title.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by section 11101(d)(1)(D) of Pub. L. 101-508 applicable
to taxable years beginning after Dec. 31, 1990, see section
11101(e) of Pub. L. 101-508, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 102(a) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, see section 151(a) of
Pub. L. 99-514, set out as a note under section 1 of this title.
Amendment by section 1272(d)(6) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, with certain
exceptions and qualifications, see section 1277 of Pub. L. 99-514,
set out as a note under section 931 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by section 104(b) of Pub. L. 97-34 applicable to
taxable years beginning after Dec. 31, 1984, see section 104(e) of
Pub. L. 97-34, set out as a note under section 1 of this title.
Amendment by section 111(b)(4) of Pub. L. 97-34 applicable with
respect to taxable years beginning after Dec. 31, 1981, see section
115 of Pub. L. 97-34, set out as a note under section 911 of this
title.
Amendment by section 121(b), (c)(2) of Pub. L. 97-34 applicable
to contributions made after Dec. 31, 1981, in taxable years
beginning after such date, see section 121(d) of Pub. L. 97-34, set
out as a note under section 170 of this title.
EFFECTIVE DATE OF 1978 AMENDMENT
Amendment by Pub. L. 95-600 effective with respect to taxable
years beginning after Dec. 31, 1978, see section 101(f)(1) of Pub.
L. 95-600, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1977 AMENDMENT
Amendment by Pub. L. 95-30 applicable to taxable years beginning
after Dec. 31, 1976, see section 106(a) of Pub. L. 95-30, set out
as a note under section 1 of this title.
SAVINGS PROVISION
For provisions that nothing in amendment by section 11801 of Pub.
L. 101-508 be construed to affect treatment of certain transactions
occurring, property acquired, or items of income, loss, deduction,
or credit taken into account prior to Nov. 5, 1990, for purposes of
determining liability for tax for periods ending after Nov. 5,
1990, see section 11821(b) of Pub. L. 101-508, set out as a note
under section 29 of this title.
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 1, 2, 3, 56, 161, 211,
1034, 1375, 3402, 6012, 6013, 6014, 6212, 6504 of this title.
