What is gross annual income?

Gross annual income is a number you may need often in your life to help manage your finances and plan for the future. There are a few simple formulas you can use to figure out your own gross annual income whenever you need it. In this article, we discuss what annual gross income is and how you can calculate it based on your own circumstances.

How does a business calculate gross income?

A business will deduct only the cost of goods sold from the annual revenue to calculate the gross income. Deducting other admin and non-operating expenses will give the net income of the business. Similarly, deducting annual expenses from an individual’s annual gross income will give you the net annual income.

How do I calculate Megan's gross annual income?

To calculate her gross annual income, Megan would need to complete the following calculations: An individual's gross annual income is the amount of money made within a fiscal year before deductions. Net annual income, however, is the total amount of money made within a year after tax deductions.

What is the difference between annual income and net annual income?

Annual income is the total value of income earned during a fiscal year. Gross annual income refers to all earnings before any deductions are made, and net annual income refers to the amount that remains after all deductions are made. The concept applies to both individuals and businesses in preparing annual tax returns.