Active Income

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DEFINITION of 'Active Income'

Income for which services have been performed. This includes wages, tips, salaries, commissions and income from businesses in which there is material participation.

INVESTOPEDIA EXPLAINS 'Active Income'

There are three main categories of income: active income, passive income and portfolio income. These categories of income are important because losses in passive income generally cannot be offset against active or portfolio income.

RELATED TERMS
  1. Income

    Money that an individual or business receives in exchange for ...
  2. Portfolio Income

    Income from investments, dividends, interest, royalties and capital ...
  3. Passive Income

    Earnings an individual derives from a rental property, limited ...
  4. Passive Activity

    Activity in which the taxpayer did not materially participate ...
  5. Passive Activity Loss Rules

    A set of rules that prohibits using passive losses to offset ...
  6. Taxable Income

    The amount of income that is used to calculate an individual's ...
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