Untaxable

Untaxable describes income, transactions, or property that a tax law does not subject to taxation. Whether something is untaxable depends on the jurisdiction and the specific tax in question (income tax, sales tax, property tax, etc.). The label is relative: an amount may be untaxable in one regime but taxable elsewhere, and tax rules can change over time.

Common examples include certain types of income that are excluded from taxation, such as interest on certain municipal bonds, life insurance proceeds paid out on a death, and gifts received within legal exclusions. Some forms of income may be untaxable for recipients but taxed to others (for example, the donor pays gift tax). For sales tax, many jurisdictions exempt basic necessities such as groceries or prescription medicines, and non-profit or religious organizations may be exempt from property taxes in certain cases. Some jurisdictions also provide exemptions for primary residences, or for certain institutional property, charity activities, or employer reimbursements that are excluded from income.

Being untaxable is not the same as not paying any taxes; other taxes, such as payroll, estate, or gift taxes, may still apply depending on the context. Eligibility for untaxable status often depends on thresholds, use, or documentation. Because tax laws are jurisdiction-specific and subject to change, individuals should consult official guidance or a qualified tax professional to determine whether a particular item or amount is untaxable in their circumstances.