Income
Candlefocus EditorIncome is typically separated into two categories: earned income and passive income. Earned income is the payroll wages, salaries, and special allowances or commissions obtained through working for a company or service. Passive income, however, is not obtained through working for a company or service, but through investments such as stocks, mutual funds, and bonds.
Income can also be classified further into gross, taxable, and net income. Gross income is income before any deductions are made. Taxable income is the amount of income on which a taxpayer is liable for tax. Net income is the amount of income that is left after deductions and taxes have been paid. This is the actual amount that you can keep and use.
Income is a broad, overarching term that can mean different things in different contexts. Taxable income is the amount of income on which a taxpayer is taxed and is central to the regulation of taxation, while gross and net income are used in business and other applications as indicators of economic health. In general, income is a vital element of our financial system, and is used in the decision making process by businesses and individuals in order to ensure sustainable, productive growth.