Personal Finance

What Is Gross Income?

Gross income is total income before any taxes or deductions are taken out. For an employee, it is the full salary or wages earned; for a business, gross income usually means revenue minus the cost of goods sold. Lenders often use gross income when calculating ratios such as debt-to-income.

Gross vs. Net Income

Net income (take-home pay) is what remains after income tax, payroll taxes, and deductions such as retirement contributions and insurance premiums.

Example

A salary of 60,000 a year is gross income of 5,000 a month; after taxes and deductions, net pay might be around 3,900–4,200 depending on location and elections.

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🔗 Related Terms

Net Income Taxable Income Debt-to-Income Ratio (DTI) Hourly Wage

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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.