Is passive income the same as pass-through income?

Passive income and pass-through income aren't exactly the same thing. Pass-through income is a broader category, which includes passive income as well as certain types of earned income, like income earned through self-employment.

What is the difference between earned income and passive income?

Earned income is the money you make in salary, wages, commissions, or tips. Investment income is money you make by selling something for more than you paid for it. Passive income is money you make from something you own, without selling it. When most of us hear the word “income,” our first thought is the salary from our jobs.

Is passive income taxed the same as active income?

Generally speaking, passive income is taxed the same as active income. However, the exact tax treatment will depend on the exact source of your passive income and your financial situation as a whole. Let’s take a look at three examples. Rental properties: Rental income is taxed the same way as regular income.