“Annual income” sounds like one of those terms you’re just supposed to know. But whether you’re filling out a job app, applying for a loan, or figuring out your taxes, it’s helpful to actually understand what counts—and what doesn’t.
What is annual income?
Annual income is the total amount of money you earn in a year—usually over a 12-month period. It includes your wages or salary, but it might also include other sources of income depending on the context.
Types of annual income
- Gross annual income: What you earn before taxes, deductions, and retirement contributions are taken out. This is the number employers and banks usually ask for.
- Net annual income: What you actually take home after deductions. This is the number that matters most when you’re budgeting.
- Household income: Combined income from everyone in your household. This shows up on forms for things like FAFSA, tax credits, or government assistance.
What counts as income?
- Full-time or part-time wages
- Tips and bonuses
- Freelance or gig work income
- Side hustles and self-employment
- Unemployment or disability benefits
- Alimony or child support (in some financial contexts)
- Rental income
- Investment dividends
Basically, if money is coming in on a regular basis—or being reported on your taxes—it probably counts.
Why knowing your annual income matters
- It helps you build a realistic budget
- It’s required for applications (jobs, rentals, credit cards, loans, etc.)
- It affects your tax bracket and eligibility for benefits or programs
- It gives you a clear starting point for financial goals
Brigit does not provide personalized financial, investment, or legal advice. This content is for general informational purposes only and should not be relied upon as financial advice.
