What is the Difference Between Net and Gross?
🆚 Go to Comparative Table 🆚The difference between net and gross lies in the deductions made from the total income or pay. Here are the key differences:
- Gross Income/Pay: Gross income is the total amount you earn (typically over the course of a year) before expenses, taxes, and other deductions are taken out. Gross pay is the total amount of money a worker earns during a set pay period before their employer withholds deductions for voluntary benefits, taxes, and other payroll deductions.
- Net Income/Pay: Net income is the profit your business earns after expenses and allowable deductions. Net pay, or take-home pay, is the amount remaining after all withholdings, such as federal and state income taxes, Social Security and Medicare taxes, health insurance premiums, retirement contributions, and other deductions, are accounted for.
In summary, gross income/pay represents the total earnings before deductions, while net income/pay is the amount that remains after all deductions have been made. Knowing the difference between gross and net income/pay is essential for managing finances and making informed decisions about income choices.
Comparative Table: Net vs Gross
The main difference between net and gross lies in the deductions made from the total amount. Here is a table comparing the two:
| Term | Meaning | Deductions | Examples |
|---|---|---|---|
| Gross | Refers to the total or whole amount made as a result of some activity, such as total profit or total sales. | None | Total revenue generated from sales |
| Net | Refers to the amount left over after all deductions are made. Once the net value is attained, nothing further is subtracted. | Various deductions, such as expenses, taxes, and interest payments | Net income, which is calculated by subtracting expenses and taxes from the gross income |
In summary, gross represents the total amount without any deductions, while net represents the amount left over after accounting for deductions such as expenses, taxes, and interest payments.
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- Gross Profit vs Gross Margin
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- Gross Profit vs Operating Profit
- Operating Income vs Net Income
- Operating Profit vs Net Profit
- Net Calorific Value vs Gross Calorific Value
- Gross Primary Productivity vs Net Primary Productivity
- Cash Flow vs Net Income
- Contribution Margin vs Gross Margin
- Gross Margin vs EBITDA
- Taxable Income vs Adjusted Gross Income
- NOPAT vs Net Income
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