by Carol-Anne
Before we can understand the defined definition between these two incomes, we need to understand what they mean on their own. Gross income refers to an employee’s total wages. it is the total amount of wages earned by an employee before taxes and other deductions. An example of this would be: An employee making roughly $40,000 per year with $10,000 withheld for income taxes, social security, health insurance, etc. would have had a gross salary or income for the tax year of $40,000.
Whereas, Net income or net pay, refers to an employee’s take-home pay, which is the gross income minus withholdings like state and federal income taxes, FICA, insurance, retirement, etc. An example of Net income would be an employee making $40,000 per year, minus deductions totaling $10,000 would have net income of $30,000.
Now that we know their separate definitions, we can compare the two. Net income is the take home pay after the deductions such as taxes, health insurance etc. whereas, Gross income is the set salary amount before any deductions or anything of that sort.
https://www.quicken.com/what-gross-income
https://www.investopedia.com/terms/n/netincome.asp
