Gross Interest

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DEFINITION of 'Gross Interest'

The annual rate of interest to be paid on an investment, security or deposit account before taxes or other charges are deducted. Gross interest is the interest bondholders receive from their investment, which will be subject to further taxes. This is opposed to net interest.

BREAKING DOWN 'Gross Interest'

A percentage of interest must be paid on an investment, security holding or deposit in the form of deductions such as taxes, charges or fees. For example, if you had $3,000 in a savings account earning 2% interest per year, charged on a yearly basis, the gross interest would be $60. If you were taxed 35%, the net interest would be $39 and taxes would be $21.

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RELATED FAQS
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    Fixed-income investors measure portfolio returns using yields. Since most bonds do not produce high returns like equity markets, ... Read Full Answer >>
  3. What are some examples of different taxable events?

    A taxable event is any event or occurrence that results in a tax liability. All investors or parties that pay taxes experience ... Read Full Answer >>
  4. How is face value used to determine taxation?

    Corporate and government bonds are the most common taxable instruments with listed face values, although there are others ... Read Full Answer >>
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