Ordinary Income Definition

Any income that is taxed at the individual’s highest tax rate is considered to be ordinary income. For most of us, our ordinary income is the sum of wages or salary, any commissions, and all interest income (excepting certain stock dividends). Ordinary income is not necessarily entirely taxable, as standard deductions can be applied and capital gains may be offset by capital losses. For most people, there is little difference between ordinary income and gross income.