Income & Work

What Is Passive Income?

Passive income is money earned with relatively little ongoing effort once something has been set up, such as rental income, dividends, interest, or royalties. In practice, most passive income requires significant upfront time or money, and some ongoing management.

Active vs. Passive

Active income comes from working, such as wages or freelance fees; passive income comes from assets or earlier work.

Tax Note

In US tax law, “passive activity” has a narrower, specific meaning mainly related to rental and business activities.

🧮 Calculate It Yourself

Put Passive Income into practice with these free calculators — no sign-up, nothing stored.

💵 Dividend Yield Calculator Estimate your passive income from dividend-paying investments. Calculate → 📈 Compound Interest Calculator See how your money grows with compound interest and regular monthly contributions. Calculate →

🔗 Related Terms

Dividend Dividend Yield Side Hustle REIT (Real Estate Investment Trust)

More Income & Work Terms

📖 Browse all glossary terms or explore all free calculators.

Last updated: September 29, 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.