Final answer:
Deductions and exemptions are items that can be subtracted from gross income to arrive at annual taxable income.
Step-by-step explanation:
The items that can be subtracted from gross income to arrive at annual taxable income are called deductions and exemptions. Deductions and exemptions reduce the amount of taxable income, which in turn reduces the amount of tax owed. For example, if someone earns $50,000 in gross income and has $10,000 in deductions and exemptions, their taxable income would be $40,000.