Definition
Pay before taxes and deductions. Salaries are quoted gross, but budgets should be built on net (take-home) income, which is often 25-35% smaller.
Why it matters
Budgeting on gross income plans money you never receive. The gross number matters for DTI and taxes; the net number is what real life runs on.
Example
A $75,000 salary is about $6,250 gross per month, but after taxes, insurance, and 401(k) contributions roughly $4,700 lands in the account. A budget built on $6,250 fails on day one.
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.