In general, all income is taxable unless it is specifically excluded by law. Here are some common types of income, salaries, wages, tips, and bonuses, as well as unearned and investment income.

Let us summarize Taxable Income into 3 categories.

Earned

The most common type of income is reported on Form W-2 for employee compensation. That includes wages, salaries, commission, tips, and more.

If you own a business, you receive business income. Businesses add up their revenue from sales, and then subtract the cost of those sales, operating costs, and general administrative costs. Whatever is left over at the end is taxable income. If the business is a pass-through organization like a partnership, S corporation, LLC, or sole proprietorship, then that income flows through to the owner’s personal tax return. On the other hand, a C corporation has its income taxed at the company level.

Passive

Rental income is generated from property rentals. Rentals include but not limited to real estate, vehicles, equipment, tools and more.

Copyrights, patents, or oil, gas, or mineral rights produce royalty income.

Portfolio

Investment income includes interest, dividends, capital gains and other types of distributions from bank accounts, stocks, bonds, mutual funds, and various other types of investments.

Retirement income includes taxable distributions from IRAs, pensions and 401(k) plans. Retirees may also receive Social Security benefits, which may be taxable depending on how much income they receive from other sources.

For additional information about retirement account qualifications.

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