Gross Income
Total income from all sources before any taxes or deductions are applied.
What is Gross Income?
Gross income for an individual is all income received before taxes and deductions, including wages, salaries, tips, bonuses, interest, dividends, rental income, capital gains, and net business profits. The IRS uses gross income as the starting point for calculating adjusted gross income (AGI) and ultimately taxable income. For businesses, gross income (gross profit) is revenue minus the cost of goods sold, distinct from the individual definition. Higher gross income typically places earners in higher marginal tax brackets and may reduce eligibility for income-based deductions, credits, and government programs that phase out at income thresholds.
Example
A physician earns $220,000 in wages, $8,000 in dividend income, and $12,000 from rental property in 2024, for total gross income of $240,000. After above-the-line deductions — $2,500 student loan interest and $23,000 in retirement contributions — adjusted gross income falls to $214,500.