{"ok":true,"canonical_url":"https://dealroom.so/glossary/taxable-income","api_url":"https://dealroom.so/api/public/glossary/taxable-income","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"taxable-income","term":"Taxable Income","group":"Reading the business","definition":"This is the portion of a business's or individual's income subject to taxation after all allowable deductions. It's a key figure on tax returns, showing what the IRS considers real earnings.","what_it_means":"When reviewing a target business, you'll look at its taxable income on business tax returns. While not directly used for valuation (SDE/EBITDA are), it provides a baseline for understanding the business's reported profitability to the IRS. Be aware that tax strategies often minimize taxable income, so it usually understates the true owner earnings.","url":"https://dealroom.so/glossary/taxable-income","official_sources":[],"related":[{"slug":"personal-tax-returns","term":"Personal Tax Returns","url":"https://dealroom.so/glossary/personal-tax-returns"},{"slug":"profit-and-loss-statement","term":"Profit and Loss Statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"irs-transcripts","term":"IRS transcripts (4506-T)","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"sde","term":"SDE","url":"https://dealroom.so/glossary/sde"}],"related_questions":[{"question":"Are death benefits from a business life insurance policy generally taxable to the recipient?","url":"https://dealroom.so/sba-7a/questions/are-death-benefits-from-a-business-life-insurance-policy-generally-taxable-to-the-recipien"},{"question":"What if the acquired business primarily generates revenue from passive rental income?","url":"https://dealroom.so/sba-7a/questions/what-if-the-acquired-business-primarily-generates-revenue-from-passive-rental-income"},{"question":"What constitutes \"passive income\" disqualifying a business from 7(a) loan eligibility?","url":"https://dealroom.so/for-lenders/questions/what-constitutes-passive-income-disqualifying-a-business-from-7-a-loan-eligibility"},{"question":"What if my personal tax returns show inconsistent income or losses from other ventures?","url":"https://dealroom.so/sba-7a/questions/what-if-my-personal-tax-returns-show-inconsistent-income-or-losses-from-other-ventures"},{"question":"Do businesses that primarily generate passive income qualify for an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/do-businesses-that-primarily-generate-passive-income-qualify-for-an-sba-7-a-loan"},{"question":"Is there an income limit for my business to be \"small\" by SBA rules?","url":"https://dealroom.so/sba-loans/basics/is-there-an-income-limit-for-my-business-to-be-small-by-sba-rules"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Taxable Income","url":"https://dealroom.so/glossary/taxable-income","source_type":"DealRoom Data"}}