Tax Facts
Tax rules and filing deadlines change. Servi-Plus provides general educational information to help individuals and business owners stay organized, but every situation is different. Contact us for guidance based on your records and current IRS rules.
Adjusted Gross Income
Adjusted gross income (AGI) generally starts with total income and is reduced by specific adjustments allowed under current law. Eligible adjustments may include certain retirement contributions and other qualified amounts. Moving expenses and alimony are subject to special, limited rules. AGI is used in calculating federal taxable income, deductions, credits, and other tax items.
Tax Credits
Tax credits are much like credits you get from a store. After you calculate your tax bill, you can use the credit to reduce the amount of the check you must write to the government. Tax credits are more valuable than tax deductions because they directly cut the amount of tax you owe, rather than reducing the amount of taxed income.
Tax Deductions
Tax deductions are expenses the IRS allows you to subtract from you adjusted gross income to arrive at your taxable income. In most cases, the lower your income, the lower your tax bill. The IRS offers all filers a standard deduction amount.
Personal Exemptions — 2026 Update
For tax year 2026, the federal personal exemption amount remains $0. Taxpayers may still qualify for deductions and credits based on filing status, dependents, income, and other facts. Consult current IRS guidance or a qualified tax professional before filing.
Taxable Income
Taxable income is generally gross income reduced by allowable adjustments and deductions. It is the amount used to calculate federal income tax before applicable credits. The exact calculation depends on current law and each taxpayer's facts.
Withholding
Also known as pay-as-you-earn taxation, the withholding method enables taxes to be taken out of your wages or other income as you earn it and before you receive your paycheck. These withheld taxes are deposited in an IRS account and you are credited for the amount when you file your return. In some cases, taxes also may be withheld from other income such as dividends and interest.
