Gross Income Calculator
Calculate gross income for individuals (all income sources before deductions) or businesses (total revenue minus cost of goods sold).
Gross Income Formula
Gross income means different things for individuals vs. businesses. Select the right mode for your situation.
Individual Gross Income
Individual Gross Income = Wages + Tips + Freelance/Self-Employment + Rental + Dividends + Interest + Other Income
This is your total income from all sources before any deductions, adjustments, or taxes. The IRS calls this the starting point for your tax calculation.
Business Gross Income (Gross Profit)
Gross Profit = Total Revenue − Cost of Goods Sold (COGS)
COGS includes direct costs: raw materials, direct labor, and manufacturing overhead. It does NOT include rent, marketing, or administrative expenses (those are operating expenses).
Gross Margin (%) = (Gross Profit / Revenue) × 100
The Income Waterfall for Individuals
| Level | What It Is |
|---|---|
| Gross Income | All income, no deductions |
| Adjusted Gross Income (AGI) | Gross Income − above-the-line deductions |
| Taxable Income | AGI − standard/itemized deduction |
| Tax Owed | Taxable Income × your marginal rate |
Gross Margin Benchmarks by Industry
| Industry | Typical Gross Margin |
|---|---|
| Software / SaaS | 70–85% |
| Retail (apparel) | 40–60% |
| Grocery / Supermarket | 20–30% |
| Manufacturing | 25–40% |
| Restaurants | 60–70% (food cost ~30–40%) |
What Is Excluded from Individual Gross Income?
- Gifts and inheritances
- Life insurance proceeds paid to a beneficiary
- Child support received
- Workers’ compensation benefits
- Qualified scholarship amounts used for tuition
These items are not taxable and are not counted in gross income.
Worked Example — Individual
Maria earns: $60,000 salary, $5,000 freelance, $3,600 rental income, $1,200 dividends.
Gross Income = $60,000 + $5,000 + $3,600 + $1,200 = $69,800
Worked Example — Business
A bakery has $200,000 in revenue. Flour, sugar, eggs, and baker labor cost $80,000 total.
Gross Profit = $200,000 − $80,000 = $120,000 Gross Margin = $120,000 / $200,000 = 60%
Pro Tips
- For individuals, lowering AGI (not just gross income) is the key tax lever.
- For businesses, gross margin is the most important profitability metric to track over time.
- A declining gross margin signals rising input costs or pricing pressure — act early.