Gross Income
The total of all income you receive during the year before any deductions or adjustments. Includes wages, interest, dividends, rental income, and business income.
Gross income is the broadest measure of your earnings for tax purposes. It includes wages and salaries shown on your W-2, self-employment income, interest, dividends, capital gains, rental income, alimony received (for divorces finalized before 2019), and most other sources of income.
Some types of income are excluded from gross income by law. For example, gifts, inheritances, municipal bond interest, and certain life insurance proceeds generally do not count. Employer-provided health insurance premiums are also excluded.
Your gross income is the starting line of your tax return. From there you subtract adjustments to arrive at AGI, then subtract the standard or itemized deduction to find taxable income. The higher your gross income, the more important it becomes to identify all available deductions and credits.
Related Terms
Adjusted Gross Income (AGI)
Your gross income minus specific adjustments such as student loan interest, IRA contributions, and self-employment tax. AGI is the starting point for calculating your taxable income.
Taxable Income
The portion of your income that is actually subject to federal income tax, calculated by subtracting the standard or itemized deduction from your AGI.
W-2
A tax form employers send to employees each year reporting wages earned and taxes withheld, including federal income tax, Social Security, and Medicare.
1099
A family of IRS tax forms used to report income other than wages, such as freelance earnings (1099-NEC), interest (1099-INT), dividends (1099-DIV), and more.