Gross Income
Gross income refers to the total income earned by an individual or a business before any deductions, such as taxes, expenses, or allowances, are applied. For individuals, gross income includes wages, salaries, bonuses, rental income, and investment returns. For businesses, it includes total sales revenue before deducting operating costs. Gross income serves as the starting point for calculating net income, taxable income, and determining financial health.
Example
An individual earns a salary of $50,000, receives $5,000 in rental income, and earns $2,000 from investments, making their gross income $57,000 for the year.
Key points
• Total income earned before any deductions or expenses.
• Includes wages, salaries, rental income, and investment returns for individuals.
• For businesses, it represents total revenue before operating costs are deducted.
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