What does gross income refer to?

Gross income refers to the total income before any deductions are made. This means it encompasses all earnings from various sources, such as wages, salaries, bonuses, and any other forms of income, without accounting for taxes, expenses, or other reductions. Understanding gross income is crucial as it provides a complete picture of an individual’s financial earnings and serves as the starting point for calculating net income, which is what individuals actually take home after taxes and deductions are applied.

In personal finance, knowing your gross income is important for budgeting and understanding tax obligations, as many financial calculations and eligibility for loans or government assistance programs are based on this figure.