That's kind of the purpose of deductions; it's common for housing (particularly mortgage), education and health costs to be deductible on one's income tax, much like a business deducts its expenses to calculate profit.

Taxing only your disposable income would mean that a person living in a mansion would pay much less than someone living in a small home, which is weird; arguably, the extra niceness of the house is "profit", whereas the shareholders don't usually benefit from paying more for their inputs (some exceptions notwithstanding).