A tax base is the difference between a person's taxable income for the year and the person's deductions. A person may choose to itemize their deductions or take the standard deduction that is provided by the federal or state government. Tax rates are mathematical tables that determine the amount of tax that an individual owes. Tax rates are based on income. The higher an individual's income, the higher the tax rate.
Income is defined as the realization of gain.
This sounds complicated, but it's really not. Anytime that you receive money, be it a paycheck or the selling of your house, you have realized a gain. Realizing gain is a key requirement in the tax law. Amounts you receive as severance pay are taxable. A lump-sum payment for cancellation of your employment contract is income in the tax year you receive it and must be reported with your other salaries and wages.