Gross income is your total earnings before any deductions, while net income (or "take-home pay") is what’s left after taxes and other deductions are subtracted.
Gross income is the headline number usually quoted for a salary — the full amount before anything is taken out.
Budgeting based on gross income overestimates what's actually available to spend, since a meaningful portion never reaches your bank account. Financial planning — rent affordability, loan eligibility, day-to-day budgeting — is generally more accurate when based on net income, the amount you actually receive.
Last reviewed: September 2026