Gross income — in plain language
the total amount of money or value a person or business receives from all sources before any taxes, expenses, or other deductions are taken out
From a fixed, curated glossary of 7,257 legal terms. Not legal advice. How it's made: plainlanguage.us/trust
Plain language
the total amount of money or value a person or business receives from all sources before any taxes, expenses, or other deductions are taken out
- total earnings
- total revenue
- income before deductions
What to watch for
- Non-lawyers often confuse 'gross income' with 'net income' (take-home pay). Always clarify that gross is the 'before' number.
- People assume 'gross income' includes everything they receive. In tax law, certain items like gifts or child support are specifically excluded by the tax code, so 'gross income' is a technical term, not just a literal sum of all cash.
- In employment contracts, 'gross income' might be used to calculate bonuses or benefits. Translators must ensure the reader understands whether this refers to their base salary or their total compensation package.
Distinguishing from Net Income. The most common error is equating gross income with the money actually available to spend. Gross income is the "top line" figure. Net income (or "take-home pay") is the "bottom line" figure after all taxes and expenses have been removed. When translating, always emphasize that gross income is the amount before these subtractions.
Context-Dependent Meaning.
- For Individuals: It is generally the sum of all money earned (wages, interest, dividends) minus specific items the government says don't count (like certain insurance payouts or gifts).
- For Businesses: It is often calculated as total sales minus the cost of the goods sold.
What to Watch For.
- Tax Code References: When a document mentions "gross income" alongside specific sections of the Internal Revenue Code, it is referring to a very precise legal definition. Do not simplify it to "everything you make," as the tax code may exclude specific types of income that a layperson would assume are included.
Legal definition
Gross income is the total amount of money or value that an individual or a business receives from all sources during a specific period, such as a year. It is the starting point for financial calculations because it represents the total inflow before any taxes, business expenses, exemptions, or other deductions are subtracted.
Meanings by context
individual tax: Everything you earn, including wages, interest, and dividends, before you subtract any tax breaks or expenses.
business/corporate: The money a business makes from sales after paying for the direct costs of producing its products, but before paying operating expenses like rent or salaries.
Examples
Legal: The Participant’s gross income under Code Sections 125, 402(e)(3), 402(h), or 403(b) shall be calculated based on total compensation.
Plain: We calculate the employee's total earnings—before any taxes or specific deductions—using the rules found in the tax code sections listed here.
Legal: The taxpayer intends to report the transfer as includible in the Grantee’s gross income for the current taxable year.
Plain: The taxpayer plans to include the value of this transfer in the total amount of money they report as earned for this tax year.
Where you'll see it
- tax filings
- employment agreements
- loan applications
- financial statements
Related terms
- taxable income
- net income
- adjusted gross income
- internal revenue code
- compensation
Word details
- Pronunciation
- GROHS IN-kuhm
- Part of speech
- noun
- Origin
- Middle English/Latin — from 'grossus' (thick, large) and 'incomere' (to come in)
- Domains
- tax law, employment law, corporate law
- Frequency
- very common
- Formality
- moderate
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