Net Income — Definition and What It Means for Your Income
Income remaining after all taxes and deductions — also called take-home pay.
Net income is the amount remaining after subtracting all taxes and mandatory deductions from gross income. It is synonymous with take-home pay for most individual employees.
Source: IRS
Why it matters
Net income is the real number to budget with. Two job offers with the same gross salary can result in different net income depending on the state's tax rate.
Example
A $90,000 gross salary in Florida (no state tax) yields a higher net income than the same $90,000 in California (state tax up to 9.3% at this level).
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FAQ
Net Income — FAQ
How do I calculate my net income?
Subtract federal income tax, state income tax (if applicable), and FICA (7.65% for W-2 employees) from your gross income.