Glossary of Terms

Income 2019-05-02 08:00:00

Income

Income is money or compensation that an individual or business earns in exchange for a product or service. For individuals, income is typically earned via wages, salary or via interest, dividends or capital gains obtained from investment holdings. For businesses, income is the difference between its total revenues and expenses and taxes.

Some income is considered taxable by the IRS, while other types of income are considered tax-exempt or tax-reduced. Tax-exempt incomes include interest income from US Treasury securities, municipal bond interest and capital gains that are offset by capital losses. Incomes that are taxed at lower rates include qualified dividends and capital gains on securities holdings.