A.Gross income is the total of annual salary minus federal income tax.
Gross income for an individual—also known as gross pay when it’s on a paycheck—is an individual’s total earnings before taxes or other deductions. This includes income from all sources, not just employment, and is not limited to income received in cash; it also includes property or services received.
Gross Income Formula:
Gross Income = Salary + Rent + Dividends + Interest + All Other Sources of Income.
Net income (NI), also called net earnings, is calculated as sales minus cost of goods sold, selling, general and administrative expenses, operating expenses, depreciation, interest, taxes, and other expenses. It is a useful number for investors to assess how much revenue exceeds the expenses of an organization.
Net Income Formula:
Net Income = Total Revenue — Total Expenses.
- Gross income is the total amount you earn (typically over the course of a year) before expenses.
- Net income is the profit your business earns after expenses and allowable deductions.
- Gross income and net income can provide a different perspective and affect goals and actions you may take personally or as a business owner.