ANNUAL INCOME MEANING: What it is, Examples and Guide

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A worker’s annual pay is a popular benchmark for financial success. Most people get paid once a month, but you can also choose to be paid weekly or even daily. It is still important to know how much money an employee makes annually. It’s a major consideration when making plans and allocating assets. It’s also used to calculate a person’s yearly tax obligation and determine whether or not they qualify for any tax credits or deductions. Earnings from salary, bonuses, commissions, overtime, and tips can significantly boost one’s yearly take-home pay. This article looks at net annual meaning, provides an example of annual gross income, and provides a calculator for estimating annual income.

Read to find out all you need to know about “Annual Income Meaning.”

Annual Income Meaning

This simply means the sum of the total money earned by a person through their work or jobs. This is the total amount paid to a laborer as his wages or salary. Although salaries and wages can be paid monthly, weekly and at times daily.

Therefore, an annual income is best defined as the total amount of money earned by a person in a year from their companies, business, or organizations.

Gross Annual Income Meaning

Gross income is the sum of all income or money earned by an individual in a year before deductions or taxes. It is vital for an employee or individual to be aware of their gross annual income. it aids in budget-making and financial analysis

How Gross Annual Income Is Calculated

For example: if Bush is a student and earns $10 per day as an attendant. His gross annual income can be calculated as:

$10 x 365 days in a year which is $3650

Thus, Bush’s gross annual income is $3650

Net Annual Income Meaning

Net annual income almost has a similar meaning to gross annual income to the extent that one is being misplaced for another but, there is a thin line between them.

A worker’s net annual income is the total amount of money a worker earns from his or her job yearly after all part-time additions and deductions have been made. Deductions could be from taxes or any other public fees

Net annual income meaning can also be referred to as net profit, which is the final gain after all expenses have been made. It can be said as gross income – the total expenses.

Your gross annual income must be greater than your net annual income

How net annual income is calculated

  • Find out the time range before payment is done and how much the individual is being paid
  • Find out how many times the person is paid in a whole year (For instance, a boy earns $10 per day and there are 365 days in a year).
  • Multiply the time-to-time salary of the boy by the number of times he is being paid in a year (For instance, $10 x 365 days which is 3650 days which is the gross income). It doesn’t stop there. To find the net income,
  • You will need to calculate the whole total expenditures that are being made in the year
  • Finally, subtract the total expenses from your gross income

From the above example, given that the total expenses made are $500

The net annual income is $3650 – $500 which is equal to $3150

Non Taxable Annual Income Meaning

Non-taxable income is money or wages that a person earns without taxes being taken out.(federal, state, or community). Therefore, non-taxable annual income meaning can be said to be the total amount of wage or money an individual earns in a year without any deduction of taxes.

Most incomes are taxable.

When Is an Income Said to Be Non-taxable?

An income is said to be non-taxable when it is earned by;

#1. Paid in as an Insurance 

Any money earned through insurance is said to be non-taxable because they are not part of the income earned by the individual. Insurance is support and therefore not to be taxed.

They may be paid in due to death or damages 

#2. Scholarship or Financial Support

Any educational aid or financial support is given to an employee is said to be non-taxable

A student can earn while still in the universities or high school or could be sponsored by any academic problem. This format of income is said to be non-taxable.

Other Categories:

  • Could be in form of gifts and credit awards
  • Life support insurance
  • Payment of child supports
  • Business compensation
  • Welfare benefits
  • Lodging and investment 

Gross Annual Income Examples

Common Examples of Gross Annual Income Meaning:

Example 1

Let us say that Bush is a part-time worker who works as an attendant and is paid $1000 per month. In a year which is 12 months, Bush would earn $1000 twelve times.

Thus; Bush’s gross annual income is $12000 per year.

Example 2

Richard is being paid $12 per hour and he works for 5 hours daily and also 2 days a week

There are 52 weeks in a year. Therefore since he works 2days a week, Richard is said to be working 104 days a year


$12 x 5 hours x 104 days which is $6240

Richard earns a total ransom of $6240 per year.

Example 3

Rashford earns $50 a week thus, there are 52 weeks in a month 

In a year Rashford would be earning a total of $2600

His gross annual income is $2600.

Annual Income Calculator

This is how to calculate your annual income on an income calculator

  • Put in your hourly wage, or the amount of money you get paid on every hour.
  • Insert your weekly work hours in the next field. Let us say its default value is 30 hours (full-time). And  15 hours if you work half-time. If not, you can change it to any particular number of hours you like.
  • Typically, a year comprises 52 weeks in a year and some other times it happens to have 53weeks. Use the default value in the third field of the yearly income calculator if you work and get paid all year. You can also insert the number of weeks in a year that you are paid for if you work fewer hours.

Gross Annual Income Calculator Example:

  • Insert the amount you get paid in an hour. ( For example, $10)
  • Enter your weekly work hours in the second field. (Example 40 hours)
  • If you get paid every week. Typically, there are 52 weeks 
  • Multiply the whole value

Mathematically; $10 x 40 hours x 52 weeks 

Gross annual income is $20,800

Net Annual Income Calculator

There are two methods for calculating your yearly net income:

In the net salary area, enter the net hourly rate; or

Fill in the first field with your gross hourly earnings or the same field with your gross annual income. Then, for both, input the tax rate.

Remember to make any necessary changes to the calculator’s first two fields. The result of the annual net income calculation will be displayed in the last field.

Net Annual Income Calculator Example

Finding your gross income, or the total amount of money you make before deductions is the first step. It will provide a strong basis for figuring out your net income. Locate your deductions, if any, on the pay stub for a prior pay month. It should provide the total sum before any deductions. Your gross compensation for that time frame would be that amount.

Using the above example on the Gross annual income calculator

The gross income is

$10 x  40 hours x 52 weeks 

Which is $20800

If the total taxes and expenses made in an hour are $1

Expenses are

$1 x 40 hours x 52 weeks

Which is $2080

Thus; the net annual income is

$20800 – $2080 which is equal to 18720


What Does Gross Annual Income Mean?

It is the total money an individual or body earn in a year before deduction made by taxes and expenses

What Does Non-taxable Annual Income” Mean?

This is the type of income earned  in a year in a state where taxes won’t be deducted 


An annual income means the total money earned by one throughout the year.

Realizing how much money an individual brings in each year is crucial for setting and adjusting financial goals and priorities. It also plays a great role in individuals’ credit and debit management. I believe the above gross annual income example was helpful.

Annual Income Meaning FAQs

What Is a Net Annual Income Meaning?

An annual income calculator is a calculation that helps in the determination of an annual or yearly income.

What Is a Net Annual Income Meaning?

This is the total yearly earnings of a worker after all deductions from taxes and other expenditures.

What Is an Annual Income Meaning?

This is the total sum of money earned by an employer or worker in a company or business enterprise throughout a year.

  1. NON TAXABLE INCOME: Meaning, Examples and Limit
  2. GROSS PROFIT PERCENTAGE: Definition, Formula & How to calculate
  3. How To Calculate The Net Pay: Simple Guide
  4. WHAT IS ANNUAL NET INCOME: Definition, Rate, And Calculator
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