Net Income
Quick Answer
Net income is the amount of money remaining after all deductions have been subtracted from gross income, including taxes, benefits, and other withholdings.
Definition
Net income is the amount of money remaining after all deductions have been subtracted from gross income, including taxes, benefits, and other withholdings.
Explanation
Net income is often called take-home pay. It's what you actually receive in your paycheck. Employers deduct federal and state taxes, Social Security, Medicare, health insurance, retirement contributions, and other benefits from gross salary to arrive at net income.
For businesses, net income is revenue minus all expenses, taxes, and costs. Personal net income is what matters for budgeting since it reflects what you can actually spend or save.
Example
A gross salary of $60,000 with total deductions of $15,000 results in a net income of $45,000 per year.
Frequently Asked Questions
What is Net Income?
Net income is the amount of money remaining after all deductions have been subtracted from gross income, including taxes, benefits, and other withholdings.
How does Net Income work?
Net income is often called take-home pay. It's what you actually receive in your paycheck. Employers deduct federal and state taxes, Social Security, Medicare, health insurance, retirement contributions, and other benefits from gross salary to arrive at net income.For businesses, net income is revenue minus all expenses, taxes, and costs. Personal net income is what matters for budgeting since it reflects what you can actually spend or save.
Can you give an example of Net Income?
A gross salary of $60,000 with total deductions of $15,000 results in a net income of $45,000 per year.
Free Excel Templates
Also try our free Budget Planner template
Create and manage your monthly budget with the 50/30/20 rule. Track income, expenses, and savings in one place.
Download Budget PlannerAlso try our free Monthly Expense Tracker template
Track daily expenses by category and identify spending patterns. See where your money goes each month.
Download Monthly Expense Tracker