Income Guide
What Is Gross Income?
Gross income is the amount of income you earn before applicable taxes, deductions, and other adjustments are taken into account. For employees, it commonly starts with wages or salary and may include overtime, bonuses, commissions, and tips.
Quick answer
Gross income is income before applicable deductions or adjustments. If you earn $60,000 in salary, your annual gross salary is $60,000 even though the amount deposited into your bank account after taxes and deductions will usually be lower.
The exact meaning can depend on context. Your paycheck may show gross pay for a specific pay period, while tax calculations may use broader income concepts.
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Gross Income Calculator
Estimate your gross income from hourly pay or salary. Add overtime, bonuses, commissions, tips, or other earnings.
This calculator estimates gross earnings before payroll taxes and other deductions. It is not a tax-return calculation.
What does gross income mean?
Gross income generally refers to the income you receive before applicable deductions, adjustments, or taxes are subtracted. For employees, this commonly includes wages or salary and may include compensation such as commissions, fees, tips, bonuses, and certain fringe benefits.
The IRS generally requires employees to include wages, salaries, and tips received for services in gross income. It also identifies commissions, fees, and certain other compensation as income.
The important point is that gross income is not the same as the amount that reaches your bank account.
What is included in gross income?
What counts as gross income depends on the context. For an employee, common sources of compensation can include:
- Regular wages
- Salary
- Overtime pay
- Bonuses
- Commissions
- Tips
- Certain taxable fringe benefits
Gross income can also involve income outside a regular paycheck, such as self-employment income, interest, dividends, rental income, and other taxable income. Tax treatment varies by type of income and circumstances.
Gross income vs. gross pay
Gross pay usually describes what you earned from an employer during a particular payroll period before payroll deductions.
Gross income can have a broader meaning, particularly in tax and personal-finance discussions. It can include income from multiple sources.
Gross income vs. net income
Gross income and net income are not the same number.
For example, suppose an employee earns $5,000 in gross pay during a month. After applicable federal and state withholding, payroll taxes, insurance, retirement contributions, and other deductions, the amount deposited into the employee's account may be less than $5,000.
Calculate your estimated take-home pay →How to calculate gross income
Hourly employee
A simple annual estimate for an hourly employee can start with:
For example:
An employee earning $25 per hour and working 40 hours each week for 52 weeks would have estimated regular annual gross earnings of $52,000 before considering overtime or additional earnings.
Salaried employee
If your annual salary is $60,000:
The actual amount per paycheck depends on your employer's pay schedule.
Adding overtime and other earnings
Overtime, bonuses, commissions, and tips can increase your total earnings. If you have several sources of income, the appropriate calculation depends on the purpose for which you are measuring income.
Where can you find your gross income?
On a pay stub
Look for labels such as:
- Gross Pay
- Gross Earnings
- Total Earnings
- Current Gross
- YTD Gross
The exact wording varies by payroll provider and employer.
On a W-2
A W-2 reports wage information and federal and other withholding information. The amount shown on a W-2 should not automatically be assumed to equal the gross-pay figure on every paycheck, because payroll deductions and tax rules can affect the amounts reported in different places.
For self-employed income
Self-employed workers may have business receipts and business expenses that need to be considered separately. Gross receipts are not necessarily the same as net business income.
Gross income vs. AGI vs. taxable income
These terms are often confused, but they describe different stages of the federal income-tax calculation.
The IRS explains that AGI starts with total gross income from applicable sources and subtracts certain adjustments. AGI is calculated before the standard or itemized deduction is applied.
Why does gross income matter?
Taxes
Gross income is an important starting point for understanding how taxable income is determined.
Paychecks
Comparing gross pay with net pay helps explain why your paycheck deposit is smaller than your earnings.
Loans
Income can be relevant when lenders evaluate a borrower's financial situation.
Budgeting
Gross income helps you understand earning power, while take-home pay is generally more useful for planning spending.
Common gross income mistakes
- Confusing gross income with take-home pay. Gross earnings occur before applicable payroll deductions.
- Assuming salary equals take-home pay. A $60,000 salary does not mean $60,000 is deposited into your bank account.
- Confusing gross income with taxable income. These are different concepts in the tax calculation process.
- Ignoring additional income. Bonuses, commissions, tips, and other income may affect the total depending on the situation.
- Using one paycheck to represent every type of income. A paycheck is only one source or period of income.
Gross income example
Imagine an employee with:
This example illustrates why looking only at base salary may not describe all of a person's earnings. Actual tax treatment depends on the type of income and the individual's circumstances.
Want to calculate your own gross income?
Use the PaycheckMint Gross Income Calculator to estimate weekly, biweekly, monthly, and annual gross earnings.
Use the Gross Income CalculatorFrequently asked questions
Is gross income before or after taxes?
Gross income generally refers to income before applicable taxes and deductions are subtracted. For employees, gross pay on a paycheck is the amount earned before payroll deductions.
Is gross income the same as gross pay?
They are closely related, but the terms can be used differently. Gross pay usually refers to earnings for a particular payroll period, while gross income can have a broader meaning.
Does gross income include overtime?
Overtime earnings generally contribute to an employee's gross pay and may be included in gross income.
Does gross income include bonuses?
A taxable bonus generally contributes to an employee's income. Payroll withholding for a bonus can be handled differently from regular wages.
Where can I find gross income on my paycheck?
Look for Gross Pay, Gross Earnings, Total Earnings, or a similar label. The exact terminology depends on your employer's payroll system.
What is the difference between gross and net income?
Gross income is generally the amount before applicable taxes and deductions, while net pay is what remains after applicable payroll taxes and deductions.
What is the difference between gross income and AGI?
AGI starts with gross income and subtracts certain permitted adjustments under federal tax rules.
Is gross income the same as taxable income?
No. Taxable income is determined after applicable adjustments and deductions under the tax rules.
Sources and methodology
PaycheckMint uses primary government sources where possible for tax-related explanations. Tax rules can change, and examples on this page are simplified educational examples.
PaycheckMint provides general financial education and estimates. This page is not tax, legal, accounting, employment, or financial advice. Tax treatment depends on your individual circumstances and applicable federal, state, and local rules. For tax filing decisions, consult the IRS or a qualified tax professional.