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Net Income
Definition
Net income is the amount of money remaining after all deductions have been subtracted from gross income, including taxes, benefits, and other withholdings.
Explanation
Net income is often called take-home pay. It's what you actually receive in your paycheck. Employers deduct federal and state taxes, Social Security, Medicare, health insurance, retirement contributions, and other benefits from gross salary to arrive at net income.
For businesses, net income is revenue minus all expenses, taxes, and costs. Personal net income is what matters for budgeting since it reflects what you can actually spend or save.
Example
A gross salary of $60,000 with total deductions of $15,000 results in a net income of $45,000 per year.