Personal Income


DEFINITION of 'Personal Income'

Total compensation received by an individual. Personal income includes compensation from a number of sources - salaries, wages and bonuses received from employment or self-employment; dividends and distributions received from investments; rental receipts from real estate investments; profit-sharing from a business and so on. In most jurisdictions, personal income above a certain exemption threshold is subject to taxation. Personal income is generally computed on a pre-tax basis.

Also referred to as "gross income."

BREAKING DOWN 'Personal Income'

Personal income determines consumer consumption, and since consumer spending drives much of the economy, trends in personal income on a quarterly and annual basis are closely tracked by national statistical organizations, economists and analysts.

Personal income tends to display a rising trend during periods of economic expansion, and show a stagnant or slightly declining trend during recessionary times.

Since the 1980s, rapid economic growth in economies such as China, India and Brazil has spurred substantial increases in personal incomes for millions of their citizens.

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