The short definition
The IRS puts it this way: gross income is "all income you receive in the form of money, goods, property, and services that isn't exempt from tax." The tax code's own definition, in 26 U.S.C. 61, starts even more broadly: "gross income means all income from whatever source derived." It then lists examples, starting with pay for work ("compensation for services, including fees, commissions, fringe benefits, and similar items"), business income, gains from selling property, interest and rents.
In everyday use, people usually mean something narrower: what you earn from your job before deductions. Both meanings share the key idea. Gross is the starting number, before anything is subtracted.
What is gross pay?
Gross pay is what you earned in one pay period before your employer takes anything out. The Consumer Financial Protection Bureau's pay stub guide describes gross wages as "how much you made before deductions were taken out." It's the biggest number on your pay stub.
- Hourly workers: gross pay = hourly rate × hours worked, plus overtime. At $25 an hour for 40 hours, gross pay is $1,000 for the week.
- Salaried workers: gross pay = yearly salary ÷ number of paychecks. A $60,000 salary paid every two weeks is $60,000 ÷ 26 = $2,307.69 per check.
- Extras: overtime, bonuses, commissions and tips you report all add to gross pay.
What is gross annual income?
Gross annual income is your gross income for a whole year. For one job with steady pay, it's simply your salary, or your hourly rate × the hours you work in a year. A full-time year is usually 40 hours × 52 weeks = 2,080 hours, so:
$25 × 40 × 52 = $52,000
If you have more than one source of income, add them all: a second job, freelance work, interest, rent you collect. Lenders and landlords who ask for gross annual income usually want this total before taxes, so check what they want included.
| Hourly rate | Gross annual income (2,080 h) | Gross monthly |
|---|---|---|
| $15 an hour | $31,200 | $2,600 |
| $20 an hour | $41,600 | $3,467 |
| $25 an hour | $52,000 | $4,333 |
| $30 an hour | $62,400 | $5,200 |
| $40 an hour | $83,200 | $6,933 |
| $50 an hour | $104,000 | $8,667 |
Gross income vs adjusted gross income (AGI)
On a tax return, gross income is the starting point, not the number you're taxed on. The IRS defines adjusted gross income as "your total (gross) income from all sources" minus certain adjustments, such as deductible IRA contributions, student loan interest, deductible HSA contributions and the deductible part of self-employment tax. After AGI, you subtract the standard deduction or your itemized deductions to get taxable income.
AGI − standard or itemized deduction = taxable income
For 2026 the standard deduction is $16,100 for a single filer and $32,200 for a married couple filing jointly.
Gross income vs net income
Net income, or net pay, is what's left after deductions: the amount that lands in your bank account. On a $60,000 salary, a single filer with no state tax and no pre-tax deductions would pay about $5,020 of federal income tax and $4,590 of Social Security and Medicare in 2026, leaving about $50,390 of net pay. The full comparison is in gross vs net income.
What isn't gross income for taxes
The IRS definition ends with "that isn't exempt from tax," so money the tax code excludes doesn't count toward gross income on your return, even though you received it. Which items are exempt is set out item by item in the tax code and IRS publications, so check before leaving anything out.
Also, the Census Bureau's measure of "money income," used for household income statistics, is different again: it counts regular income before taxes, but leaves out items like capital gains and noncash benefits such as food assistance. That's why official income statistics don't match tax-return totals.
Why gross income matters
- Loans and renting: lenders compare your gross monthly income with your debt payments. Check yours with the debt-to-income calculator.
- Job offers: salaries are quoted gross. Convert one with the salary calculator or the salary to hourly table.
- Taxes: brackets apply to taxable income, which starts from gross income. See the income tax calculator.
Sources
- IRS Publication 501 (definition of gross income)
- 26 U.S.C. 61: Gross income defined
- IRS: Definition of adjusted gross income
- CFPB: Understanding your pay stub
- IRS: 2026 inflation adjustments and standard deduction
- Census Bureau: About income
Figures last reviewed October 2026.