Gross vs Net Income
Gross income is your total earnings before deductions; net income is what reaches your account after taxes and contributions.
Gross income is the headline figure, your salary or revenue before any deductions. Net income, or take-home pay, is what remains after income tax, social and health contributions, and other withholdings. The gap between the two can be substantial, which is why budgeting should always be based on net income, not gross. Understanding both helps you evaluate job offers, negotiate raises, and plan realistically. Assetli's analytics work from the actual money that lands in your accounts, your true net income.
Example
A $5,000 gross monthly salary might become roughly $3,800 net after taxes and contributions, and that $3,800 is what your budget should be built on.
Try in Assetli
Read more
Related terms
Cash Flow
The net amount of money moving in and out of your accounts over a given period — positive when income exceeds expenses, negative when it doesn't.
Savings Rate
The percentage of income saved or invested rather than spent, widely considered the most important factor in building wealth.
50/30/20 Rule
A budgeting guideline that allocates 50% of after-tax income to needs, 30% to wants, and 20% to savings and debt repayment.
Explore more terms
VAT (Value Added Tax)
A consumption tax added to the price of most goods and services, ultimately paid by the end consumer.
Tax Credit / Allowance
An amount subtracted directly from the tax you owe, reducing your bill euro for euro.
Tax Base
The amount of income or value on which tax is calculated, after deductions but before credits.
Tax Return
An annual filing that reports your income and deductions to calculate the tax you owe or are refunded.
Envelope Method
A cash-based budgeting system where money is divided into physical or virtual envelopes, each assigned to a specific spending category.
Zero-Based Budgeting
A budgeting method where every dollar of income is assigned a purpose, so income minus expenses equals zero.