How To Calculate Gross Monthly Income (With Examples)

Glossary

How to Calculate Gross Monthly Income: A Comprehensive Guide for 2026

Summary. Calculating your gross monthly income can differ based on whether you receive a salary or hourly wages. For businesses, it relies on the revenue generated. Understanding gross income is essential for both individuals and businesses, as it reflects financial health and is crucial for applications involving loans or financial reports.

As we navigate through 2026, understanding financial terms is essential for both personal and business finance management. One crucial term is “gross income,” which will play a vital role in various financial decisions, including loan applications and investment evaluations.

In this article, we will define gross income and provide a step-by-step guide on how to calculate it for individuals and businesses.

Key Takeaways

Gross income for individuals and households is the total income before taxes and deductions.
Additional income sources such as side hustles, investment returns, and support payments contribute to gross income alongside salary.
For businesses, gross income is the total revenue minus the cost of goods sold (COGS).

How to Calculate Gross Monthly Income

In This Article

Skip to section

What Is Gross Income?
Why Is Gross Income Important?
How to Calculate Gross Monthly Income for Individuals
How to Calculate Gross Monthly Income for Businesses
Examples of Gross Income Calculations
Gross Income FAQs
Final Thoughts
References
Sign Up For More Advice and Jobs

What Is Gross Income?

Gross income encompasses all earnings, including salary, profits, and other income sources, before any deductions like taxes are applied.

For individuals, this means total payments received before tax deductions. For businesses, gross income is calculated by subtracting the cost of goods sold from total revenue.

Why Is Gross Income Important?

Gross income is a crucial indicator for individuals and businesses as it provides insights into financial health and historical performance. Understanding this metric can significantly affect future financial decisions.

For individuals. Financial institutions often request gross income figures during loan applications to assess creditworthiness and repayment capability.
For businesses. Monitoring gross income over time is essential for evaluating profitability and making informed financial decisions.

How to Calculate Gross Monthly Income for Individuals

The method for calculating gross monthly income varies based on whether you receive an annual salary or an hourly wage.

Annual Salary

If you are a salaried employee, simply divide your annual pre-tax salary by twelve.

The Equation Is:

Annual Salary / 12 = Gross Monthly Salary
Hourly Wage

If you earn an hourly wage, calculate your gross monthly income by first determining your weekly earnings (hourly rate multiplied by hours worked), then annualizing it and finally dividing by twelve.
The Equations Are:
- Hourly Rate x Hours Per Week = Weekly Pay
- Weekly Pay x 52 = Annual Salary
- Annual Salary / 12 = Gross Monthly Income

Remember, additional earnings from side jobs or other sources also contribute to your gross monthly income.

Examples of additional income include:

A part-time job or second employment
Side hustles
Freelance or contract work
Overtime, bonuses, or commissions
Tips
Investment income
Government benefits
Support payments
Income from other household members

How to Calculate Gross Monthly Income for Businesses

For businesses, gross monthly income is derived from total revenue minus the cost of goods sold (COGS). Gross revenue includes all income generated within a specified timeframe.

The Equation Is:

Gross Monthly Revenue – Cost of Goods Sold (COGS) = Gross Monthly Income

Examples of Gross Income Calculations

Applying these calculations to real-world examples can enhance your understanding of determining gross income.

Hourly Employee Monthly Gross Income Example

Samantha works as a waitress, earning $9 per hour for 25 hours a week, plus an average of $125 in tips weekly. To find her gross monthly income, she follows these steps:

Weekly Pay: 25 hours x $9 = $225

Total Weekly Income: $225 + $125 = $350

Annual Salary: $350 x 52 weeks = $18,200

Gross Monthly Income: $18,200 / 12 = $1,516.67
Salaried Employee Monthly Gross Income Example

James, an office manager with a salary of $60,000, also earns $700 monthly from freelance translation work. His gross monthly income is calculated as follows:

Gross Monthly Salary: $60,000 / 12 = $5,000

Total Income: $5,000 + $700 = $5,700
Freelance Worker Monthly Gross Income Example

Jennifer, a freelance writer and illustrator, earns from various projects. Her monthly income is as follows:

Children’s Illustration: $1,000

Nature Wildlife Magazine: $16/hour for 20 hours/week = $320/week = $1,386.67/month

Digital Album Design: $150/project for 5 projects = $750

Total Gross Monthly Income: $1,000 + $1,386.67 + $750 = $3,136.67
Business Monthly Gross Income Example

A clothing company launched a new line and generated $5,000,000 in revenue. Their costs totaled $610,000. The gross monthly income is calculated as:

Gross Monthly Income: $5,000,000 – $610,000 = $4,390,000

Gross Income FAQs

What does gross monthly income mean?

Gross monthly income refers to the total earnings before deductions. For instance, if your salary is $4,000 and you earn $500 from rental income, your gross monthly income is $4,500.
How do I calculate my gross monthly income before taxes?

Add all income streams before any deductions. This includes salary, investment income, and other earnings. If calculated annually, divide by 12 for monthly gross income.
What is net monthly income?

Net monthly income is what remains after deductions such as taxes and benefits. It is often referred to as “take-home pay,” which is crucial for budgeting and financial planning.

Final Thoughts

Understanding your gross monthly income is vital for financial planning, loan applications, and determining your taxable income. While the calculations are straightforward, they provide essential insights into your financial situation.

References

H&R Block – A Guide to Calculating Gross Income

Glossary

Never miss an opportunity that’s right for you.

Author

Sky Ariella

Sky Ariella is a professional freelance writer, originally from New York. She has been featured on websites and online magazines covering topics in career, travel, and lifestyle. She received her BA in psychology from Hunter College.

Create Resume