What is gross income?
Learn about what gross income is, how to calculate it before taxes, and why it’s important for saving.
Key takeaways
Gross income is your total income before taxes and other deductions.
Gross income includes wages, salaries, and investment income.
IGross and net income are important for all financial decisions and saving options.
Gross income definition & key components
Gross income is all the income you earn in a tax year from any source before any taxes or deductions. It includes income from various sources, like cash, property, and services. Typically, it’s referred to as gross income on a paycheck.
On your paycheck, you’ll also see how much net income you get. That’s the amount of money left after deductions like taxes, employee benefits, or retirement plan contributions — essentially your take-home pay. Generally, a pay stub includes a breakdown of what deductions and what amount of each deduction have been taken out of your paycheck.
It’s important to know what gross income includes and what deductions are taken out to be able to plan for the cost of living expenses like food, housing, bills, and transportation. Your net income is not only crucial for living expenses, but also for how much money you have available to spend, pay back debt, or save.
What does gross income include?
Gross income is your total income before taxes or other deductions. Income sources may include:
Wages and salaries
Side-gigs or self-employment revenue
Investment income including interest, dividends, and capital gains
- Rental income, alimony, pensions, unemployment, Social Security benefits
What is not included in gross income?
As there is a very broad meaning to “all income,” it might be helpful to know what kinds of income are excluded from taxation. Those include gifts and inheritances, most municipal bonds, life insurance death benefits, and non-taxable portions of Social Security.
Gross income vs. adjusted gross income (AGI) & net income
Adjusted gross income (AGI) is your total income minus certain above-the-line deductions, such as retirement contributions or student loan interest, before itemized or standardized deductions. The AGI is tallied by the IRS before any taxes are calculated and paid.
Net income is your gross income reduced by taxes and other deductions. It’s also known as your take-home pay. It is the amount that ends up in your bank account or paycheck. Those taxes and deductions that affect your net income are state, local, Social Security, Medicare, and federal taxes. Other deductions might be health and dental insurance premiums, retirement contributions such as Roth IRAs, and flexible spending accounts (FSAs).
By reducing your gross income, these deductions also lower the taxes withheld from your paycheck, resulting in your net income, or take-home pay.
Here’s a comparison of gross income vs. AGI vs. net income:
Gross income | Adjusted Gross Income (AGI) | Net Income |
Gross income is total income before taxes and includes wages, salaries, side-gigs, self-employment revenue, interest, dividends, capital gains, rental income, alimony, pensions, unemployment, Social Security benefits | AGI is total income minus certain above-the-line deductions, Above-the-line deductions such as retirement contributions or student loan interest | Net income is gross income reduced by taxes and other deductions, It is affected by federal, state, local, Social Security, and Medicare taxes, Net income is the amount that ends up in your bank account or paycheck |
Is gross income before or after tax?
Gross income is before any taxes or other deductions. After filing a tax return and federal or state withholdings, your taxable income becomes net income. Deductions include retirement contributions or student loan interest. After those deductions and before taxation, your gross income is referred to as adjusted gross income (AGI).
How to calculate your gross income
For calculating your gross income, you need your pay stubs and tax forms (W-2 box 1, 1099s). By adding up all income sources manually or via tax software, you will get your gross income.
For example, if you have income through a job, a side gig, and interest payments, your total earnings have to be added up, resulting in your gross income:
Annual salary from primary job: $46,000
Income from side gig: $15,000
Interest earnings from a savings account: $400
To calculate the gross income:
Salary + Side Gig Income + Interest = Gross Income
$46,000 + $15,000 + $400 = $61,400
If you’re a saver, it might be helpful to review forms from the past year and sum up monthly projections so that you know how you can better use and save your money.
Using gross income to choose a savings account
There are a few tips with which you can choose a savings account based on your gross income:
What is your gross income: Estimate your annual gross income to gauge how much you can save monthly.
Compare annual percentage yields (APY) tiers or levels: APY can sometimes depend on your gross income. Raisin does not use your income to determine your APY.
Consider liquidity: You might want to ensure liquidity options, or consider how often you will need to access your funds.
Plan your saving strategy: With a money savings plan and gross income forecasts (e.g., from bonuses), you can plan laddered savings.
Raisin offers access to a variety of high-yield savings products to cater to different savers. Comparing account types and interest rates can help you find the best account that suits your needs.
Frequently asked questions (FAQ)
Is gross income the same as taxable income?
No, gross income and taxable income are not the same. While gross income represents the total amount of your earnings before taxes and other deductions, taxable income is the portion that’s subject to taxation.
Where do I find gross income in my tax return?
You find your annual gross income in the W-2 form under Check Box 1 for wages, tips, or other compensations. If you’re an independent contractor, you’ll receive 1099 forms from your clients, where you can find your gross income.
Does gross income include retirement income or Social Security?
Yes, gross income includes retirement income and a portion of Social Security benefits. If your gross income exceeds a certain threshold, it might affect the taxation of those benefits and your eligibility for various tax credits and deductions. In turn, this can have an impact on your overall tax liability and financial situation.
How does gross income affect my ability to open a savings account?
Your gross income is the basis for all your financial decisions. Also, your net income depends on the amount of your gross income. Some savings accounts might have certain requirements for minimum deposits. Raisin only requires a $1 minimum deposit for all account types.
The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.
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*APY means Annual Percentage Yield. APY is accurate as of April 26, 2026. Interest rate and APY may change after initial deposit depending on the terms of the specific product selected. Minimum opening deposit is $1.00.
Raisin is not an FDIC-insured bank, and FDIC deposit insurance only covers the failure of an insured bank.
Raisin is not an NCUA-insured credit union. NCUA deposit insurance only covers the failure of an insured credit union.
Raisin does not hold any customer funds. Customer funds are held in various custodial deposit accounts. Each customer authorizes the Custodial Bank to hold the customer’s funds in such accounts, in a custodial capacity, in order to effectuate the customer’s deposits to and withdrawals from the various bank and credit union products that the customer requests through Raisin.com. The Custodial Bank does not establish the terms of the bank or credit union products and provides no advice to customers about bank or credit union products offered by the applicable bank or credit union through Raisin.com. Each customer also authorizes the Service Bank to move funds among the various banks and credit unions at the customer’s request. First International Bank & Trust (FIBT), Member FDIC, is the Service Bank. Bell Bank and Starion Bank, each Member FDIC, are the Custodial Banks.
†Based on $250,000 in FDIC or NCUA insurance coverage per insurable category of ownership at each partner bank or credit union on the Raisin platform (each a "Product Bank"), when aggregated with all other deposits held by you at such Product Bank and in the same insurable category. Deposits made through Raisin will be eligible to receive deposit insurance from the FDIC or the NCUA (each a "Deposit Insurer") in accordance with and up to the maximum amount permitted by law at each Product Bank. Raisin is not a bank or credit union and does not hold any customer funds. Funds are held at FDIC-insured banks and NCUA-insured credit unions. Deposit insurance covers the failure of an insured bank or credit union. Certain conditions must be satisfied for pass through deposit insurance coverage to apply. Customers may choose to deposit funds with identically registered accounts at different Product Banks on the Raisin platform to be eligible for Deposit Insurer coverage up to $10 million for individual accounts and $20 million for joint accounts when at least 40 Product Banks are utilized. Please be aware, however, that any deposits you have at a Product Bank, whether through the Raisin platform or outside the Raisin platform, that you may hold in the same capacity (such as in an individual capacity or joint capacity) count toward the applicable Deposit Insurer's deposit insurance maximum amount, and any such amounts that you hold in the same capacity at a Product Bank that exceed the maximum insurance coverage by the applicable Deposit Insurer will not be insured. For more information on FDIC deposit insurance, please see here. For more information on the NCUA share insurance fund, please see here. You are solely responsible for monitoring the amount of funds you have on deposit at each a Product Bank, whether through the Raisin platform or outside the Raisin platform, to confirm that the deposits you hold in the same capacity at each Product Bank do not exceed the maximum deposit insurance coverage provided by the applicable Deposit Insurer.