What is the money you 'earn' called before deductions are taken out?

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Study for the General Financial Literacy State Test. Prepare with flashcards and multiple-choice questions, each with hints and explanations. Enhance your financial expertise for success!

Multiple Choice

What is the money you 'earn' called before deductions are taken out?

Explanation:
Gross income is the total amount you earn before any deductions are taken out. It includes your salary, wages, bonuses, and overtime before taxes, retirement contributions, insurance, and other withholdings are removed. Net income is what you have left after those deductions, often called take-home pay. Disposable income is the amount available to spend after taxes have been paid. So the term for the money you earn before deductions is gross income.

Gross income is the total amount you earn before any deductions are taken out. It includes your salary, wages, bonuses, and overtime before taxes, retirement contributions, insurance, and other withholdings are removed. Net income is what you have left after those deductions, often called take-home pay. Disposable income is the amount available to spend after taxes have been paid. So the term for the money you earn before deductions is gross income.

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