Tax Glossary Definition
In personal income taxation, a tax unit refers to the individual or group of individuals on whom tax liability is assessed. It can be a single taxpayer, such as an individual, or a group treated as a single entity, such as a married couple filing jointly. The concept of a tax unit determines how income, deductions, and credits are aggregated for calculating tax liability.
Example: In the United States, a married couple can choose to file jointly as a single tax unit. Their combined income, deductions, and credits are considered together to calculate the total tax liability, rather than assessing each spouse separately.
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