Definition of

Net Income

Net Income

Income after tax and expenses.


For a business: total sales minus all expenses including tax.

Example: Bravedog Inc sells $400,000 of dog biscuits, spending $180,000 making them. Marketing and other costs and tax are $100,000. Bravedog's gross income is $220,000 and its net income is $120,000.


For a person: salary or wages after tax and any other deductions

Example: Sam earns wages of $900. Tax and other deductions are $250. So Sam's gross income is $900 and net income is $650.