Annual Income Definition

Your income is simply wealth that is generated in exchange for work or through investing capital. A person’s annual income is their combined (or aggregate) income over a one year period, typically beginning on January 1st. For example, if a person’s bi-weekly paycheck is $2,250, their annual income would be $58,500.

There is a difference between gross annual income and net annual income. Gross annual income is the full amount, before any deductions, that one earns in a given year. Net annual income is the gross annual income less amounts which unavoidably are deducted from the paycheck before it is received. Examples are income taxes and wage garnishments.