untaxed

Untaxed describes income, goods, or transactions that are not subject to taxation under the laws of a jurisdiction. Untaxed items arise from statutory exemptions, tax-free thresholds, or regimes that do not impose tax on specific categories. The designation is not in itself a judgment of illegality; it can reflect policy choices, as well as how tax law is administered.

In income, untaxed items commonly include forms of non-taxable income such as life insurance proceeds, gifts within permitted limits, certain government benefits, and interest on certain municipal bonds that is exempt from federal income tax. Some jurisdictions also exempt or partially tax foreign-earned income, depending on residence and local rules.

In goods and services, untaxed or tax-exempt items include categories designated by law as not subject to sales tax or value-added tax. Examples commonly cited include basic groceries and prescription medicines in some places, as well as certain exports or services that receive zero-rating or statutory exemptions.

Economic and policy considerations: tax expenditures and exemptions reduce government revenue and can influence consumer and business behavior. Untaxed sectors may be subject to oversight to prevent abuse, while others reflect deliberate policy choices. The distinction between legally untaxed items and evasion can be important for enforcement and compliance.

See also: Tax exemption, Non-taxable income, Tax-free, Tax policy, Sales tax, VAT, Tax evasion, Tax avoidance.