Which item is specifically excluded from being treated as income?

Non-taxable gifts are specifically excluded from being treated as income because they do not constitute compensation for services rendered or gains from investment activities. The Internal Revenue Service (IRS) classifies non-taxable gifts as transfers of wealth between individuals without the expectation of receiving something of equal value in return. As such, these gifts do not typically incur income tax liabilities for the recipient.

In contrast, wages from employment, rental income, and interest income are all forms of compensation or returns on investment that are considered taxable income under federal tax laws. Wages represent remuneration for labor, rental income arises from leasing out property, and interest income is generated from lending money or investing in interest-bearing accounts. Each of these income types is subject to taxation, distinguishing them clearly from non-taxable gifts, which remain exempt from income tax calculations.