Earned Income

What is 'Earned Income'

Earned income is income derived from active participation in a trade or business, including wages, salary, tips, commissions and bonuses. This is the opposite of unearned income.

BREAKING DOWN 'Earned Income'

Earned income includes any income that a person or company receives for work they have done – AKA "personal efforts". If you collect regular dividends from a stock, or receive a monetary gift, that money would be considered unearned income because you didn't do anything to earn it.