Income and Deduction Terms: US, Canada and India Tax Glossary

These income and deduction terms look alike across the United States, Canada and India, but they rarely mean exactly the same thing. This glossary defines each term in plain English, shows the closest equivalent in the other two countries and links to the guide that explains the filing in detail. Figures are labeled by year; always confirm the current amount before you rely on it.

Income and deduction terms at a glance

India's form names change over time as the Income-tax Act, 2025 takes over for periods from April 1, 2026; your Chartered Accountant (CA) confirms the current form for each filing.

Terms A to E

Adjusted gross income (AGI)

AGI is your total U.S. income minus "above-the-line" adjustments such as contributions to a traditional IRA or the student loan interest deduction. It is the starting point for most phase-outs and for the state return. See the Form 1040 roadmap.

Equivalents: Canada, net income (line 23600). India, the computation between gross total income and total income.

Advance tax

India expects tax on income other than salary to be paid in instalments during the year rather than at filing time, typically around mid-June, mid-September, mid-December and mid-March. See advance tax and interest.

Equivalents: U.S. estimated tax. Canada, quarterly instalments (March 15, June 15, September 15 and December 15 in 2026).

Annual Information Statement (AIS) and Form 26AS

Both are online statements on the Indian e-Filing portal. The AIS lists salary, interest, dividends, securities trades and, since July 20, 2026, foreign asset data from CRS and FATCA; Form 26AS shows tax deducted or paid. Read the portal, AIS and Form 26AS guide.

Equivalents: U.S., wage and income transcript. Canada, CRA My Account slips.

Basic personal amount

Canada gives every resident a non-refundable credit on the first slice of income. For 2026 the maximum is $16,452 and the minimum is $14,829, and it declines for high earners. See Canada credits, benefits and deductions.

Equivalents: U.S., the standard deduction. India, the basic exemption limit under the rate slabs.

Capital gains

A capital gain is the profit on selling an asset such as shares or property. In the U.S., assets held more than one year get long-term rates; in Canada, one-half of a gain is taxable (the inclusion rate stays at 50 percent for 2026). India taxes gains by asset type and holding period. See capital gains compared and capital gains for NRIs.

Equivalents: Canada, Schedule 3. India, Schedule CG.

Deduction

A deduction reduces taxable income rather than the tax itself, so its value depends on your rate. Examples include the U.S. standard deduction, RRSP contributions in Canada and, under the old Indian regime, investments such as provident fund contributions. See income tax systems compared.

Equivalents: Canadian deductions are subtracted before net income; Indian deductions come before total income.

Dividends

Dividends are corporate profits paid to shareholders. The U.S. taxes "qualified" dividends at lower rates; Canada grosses up and credits eligible dividends from Canadian corporations; India taxes dividends at your slab rate, with tax deducted at source in many cases. See income tax systems compared.

Equivalents: Forms 1099-DIV, T5 and the AIS dividend entries.

Earned income

Earned income means wages, tips and net self-employment earnings. It matters for the Earned Income Credit and IRA eligibility in the U.S., and for RRSP room in Canada, which is 18 percent of the prior year's earned income up to a dollar limit. See the Form 1040 roadmap.

Equivalents: India has no single term; it separates salary from business income.

Exempt income

Some income is excluded from tax by law, such as qualifying municipal bond interest for U.S. federal tax, growth inside a Canadian TFSA, or interest on NRE deposits for an NRI under Indian rules. Exempt in one country is not exempt in all three: a U.S. person still reports worldwide income unless a specific U.S. exclusion applies. See NRE, NRO and FCNR accounts.

Terms F to M

Foreign earned income exclusion (FEIE)

Qualifying U.S. citizens and residents living abroad may exclude up to $132,900 of foreign earned income for 2026 using Form 2555. You must have a tax home abroad and meet a bona fide residence or physical presence test (330 days in 12 months).

Equivalents: Canada and India have no direct match; India taxes non-residents only on India-source income. See NRI income taxable in India.

Foreign tax credit (FTC)

An FTC relieves double tax by crediting tax paid to another country against your home-country tax on the same income. The U.S. uses Form 1116, Canada uses T2209 and India uses Form 67. See foreign tax credits across three countries and India Form 67.

Gross total income and total income (India)

Indian tax law sorts income into heads: salary, house property, business or profession, capital gains and other sources. Their sum is gross total income; deductions reduce it to total income, the amount the slab rates apply to. These are terms used for assessment year 2026-27 under the 1961 Act, and the Income-tax Act, 2025 moves to a tax-year framework, so ask your CA for the current wording. See India's tax system and financial year.

Equivalents: U.S., AGI and taxable income. Canada, net income and taxable income.

House rent allowance (HRA)

HRA is a salary component in India whose exempt portion depends on rent paid, basic salary and the city. It is generally available under the old regime and not the new one.

Equivalents: none in the U.S. or Canada; housing allowances are usually taxable there.

Interest income

Interest from bank accounts and bonds is taxable in the year earned. U.S. persons report foreign interest too, even if India treats NRE interest as exempt for NRIs under Indian rules.

Equivalents: Forms 1099-INT, T5 and AIS interest entries.

Itemized deductions

On Schedule A, U.S. taxpayers can deduct state and local taxes (capped at $40,000 for 2025, or $20,000 if married filing separately), mortgage interest, charity and medical costs instead of the standard deduction. Itemize only if the total beats the standard amount. See the Form 1040 roadmap.

Equivalents: Canada claims similar items as non-refundable credits (the medical threshold is $2,890 for 2026). India's old regime allows named deductions.

Loss carry-forward

A loss you cannot use this year can often be applied to other years. U.S. capital losses offset gains plus up to $3,000 of other income a year, with the rest carried forward. Canadian net capital losses can be carried back three years and forward without limit. India generally requires you to file your return on time to carry most losses forward, so a missed due date can cost you the loss.

Equivalents: U.S., net operating loss and capital loss carryover. Canada, non-capital and net capital losses.

Modified adjusted gross income (MAGI)

MAGI is AGI plus certain add-backs, and it sets phase-outs. For 2026, Roth IRA contributions phase out between $153,000 and $168,000 for single filers and between $242,000 and $252,000 for joint filers. See US withholding and estimated tax for newcomers for how phase-outs affect planning.

Equivalents: none by name; Canada uses "adjusted family net income" for benefits.

Terms N to Z

Net income and taxable income (Canada)

Canada first computes net income by subtracting deductions such as RRSP contributions from total income. It then subtracts further deductions to reach taxable income, applies bracket rates and finally subtracts non-refundable credits. See the T1 step by step.

Equivalents: U.S., AGI and taxable income. India, total income.

Net investment income tax (NIIT)

NIIT is a 3.8 percent U.S. surtax on investment income of higher earners, reported on Form 8960. It applies to the lesser of net investment income or the amount by which modified AGI exceeds a threshold that depends on filing status. U.S. citizens and resident aliens can owe it on foreign investment income as well. See the Form 1040 roadmap.

Equivalents: none in Canada or India.

Qualified business income (QBI) deduction

Owners of sole proprietorships, partnerships and S corporations may deduct up to 20 percent of qualified business income, subject to income thresholds and extra limits for certain service businesses. It is taken below AGI, so it lowers taxable income but not AGI itself. See business tax returns and planning.

Equivalents: none in Canada, where the small business deduction applies at the corporate level, or in India, where presumptive taxation plays a similar simplifying role.

Rental income

Rent is taxable net of allowable expenses. The U.S. uses Schedule E and requires you to report worldwide rental income, including an Indian apartment; Canada uses Form T776; India taxes income from house property with a standard allowance. See real estate investor tax.

Schedule 1-A deductions

From tax year 2025 through 2028, U.S. filers may claim deductions for qualified tips (up to $25,000), overtime premiums (up to $12,500, or $25,000 joint), car loan interest (up to $10,000) and an extra $6,000 for each person aged 65 or older, all subject to income limits, and most requiring a Social Security number on the return. See US tax changes for 2026.

Self-employment income

The U.S. taxes net business profit on Schedule C and adds self-employment tax; Canada uses Form T2125 and charges both halves of CPP (up to $8,460.90 in 2026); India taxes business or professional income, with presumptive options for small businesses. See self-employed in Canada.

Standard deduction

The standard deduction is a fixed U.S. amount subtracted from AGI. For 2026 it is $16,100 for single filers, $32,200 for joint filers and $24,150 for heads of household (2025: $15,750, $31,500 and $23,625). See the Form 1040 roadmap.

Equivalents: Canada, the basic personal amount. India, a standard deduction for salaried people.

Tax credit

A credit reduces the tax itself. Non-refundable credits can reduce tax only to zero; refundable credits can create a refund. Examples include the U.S. child tax credit ($2,200 per child for 2025), the refundable Canada Workers Benefit and India's rebate for lower incomes. See Canada credits, benefits and deductions.

Taxable income

Taxable income is the figure the rate table applies to after deductions. In the U.S. it is AGI less the standard or itemized deduction; in Canada it is net income less certain deductions; in India it is total income. See income tax systems compared.

TDS and TCS

In India, tax deducted at source (TDS) is withheld by the payer on salary, interest, rent and property purchases from NRIs, and tax collected at source (TCS) is added by a seller on specified sales. Both appear in Form 26AS and the AIS. See TDS on property sale by NRIs.

Equivalents: U.S. withholding. Canada, source deductions.

Withholding (United States)

Employers withhold income tax from wages using Form W-4. Payers withhold 24 percent backup withholding if you omit a taxpayer ID, and 30 percent of U.S.-source passive income paid to nonresident aliens unless a treaty lowers it. See nonresident FDAP and ECI.

How we can help

We prepare the U.S. side of your return from the Aurora, Illinois area and coordinate with your Canadian CPA or Indian Chartered Accountant so these figures agree across countries. See individual returns for newcomers and NRIs and cross-border tax. Browse the full tax and compliance glossary for the other term sets.

Frequently asked questions

General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.