Tax glossary

Gross Income

Gross Income — what it means, how it works, and a real example, explained without the jargon.

What is Gross Income?

Gross income is every dollar you receive that isn't specifically tax-exempt — the top line before any adjustments or deductions.

How it works

It sweeps in wages, business profit, interest, dividends, rents, retirement distributions, and more. From gross income you subtract adjustments to reach AGI, then deductions to reach taxable income. It's the widest of the three income measures.

A quick example

Wages of $70,000 plus $3,000 of freelance profit and $500 of interest give you $73,500 of gross income — before anything is subtracted.

What people get wrong

A handful of items are excluded from gross income by law — most gifts, inheritances, and qualified Roth withdrawals. Knowing what's excluded is as valuable as knowing what's deductible.

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Frequently asked questions

What does Gross Income mean?

Gross income is every dollar you receive that isn't specifically tax-exempt — the top line before any adjustments or deductions.

How does Gross Income work?

It sweeps in wages, business profit, interest, dividends, rents, retirement distributions, and more. From gross income you subtract adjustments to reach AGI, then deductions to reach taxable income. It's the widest of the three income measures.

What's the most common mistake with gross income?

A handful of items are excluded from gross income by law — most gifts, inheritances, and qualified Roth withdrawals. Knowing what's excluded is as valuable as knowing what's deductible.