Tax Base
The amount of income or value on which tax is calculated, after deductions but before credits.
The tax base is the figure your tax rate is applied to, your income, profit, or the value of a transaction, once allowable deductions have been subtracted. Lowering your tax base through legitimate deductions, like retirement contributions, reduces the tax you owe before any credits. Understanding the difference between the base and the rate is key to seeing how taxes actually work. The same income can produce very different bills depending on what reduces the base. Good records let you claim every deduction and shrink the base correctly.
Example
A $60,000 salary minus $8,000 of deductible contributions gives a tax base of $52,000, and your tax rate is applied to that lower figure.
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Related terms
Gross vs Net Income
Gross income is your total earnings before deductions; net income is what reaches your account after taxes and contributions.
Tax Credit / Allowance
An amount subtracted directly from the tax you owe, reducing your bill euro for euro.
VAT (Value Added Tax)
A consumption tax added to the price of most goods and services, ultimately paid by the end consumer.
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Tax Return
An annual filing that reports your income and deductions to calculate the tax you owe or are refunded.
Tax Deduction
An expense subtracted from your taxable income, lowering the amount of income that gets taxed.
Insurance Deductible (Excess)
The amount you pay out of pocket on a claim before your insurance starts covering the rest.
Insurance Premium
The recurring amount you pay, monthly or yearly, to keep an insurance policy active.
Insurance Claim
A formal request to your insurer to pay for a covered loss or event.
Liability Insurance
Coverage that pays for harm or damage you cause to other people or their property.