Salary vs. Income: What's the Difference?
Edited by Janet White || By Harlon Moss || Published on December 13, 2023
Salary refers to regular payment for employment, typically monthly or yearly. Income refers to total money received, including salary, investments, and other sources.
Key Differences
Salary refers to the fixed regular payment, typically on a monthly or yearly basis, made by an employer to an employee, especially a professional or white-collar worker. Income, on the other hand, encompasses all the money or equivalent value received by an individual or a household, including salaries, wages, bonuses, investments, and any other monetary gains.
Income is a broader term than salary. While salary is strictly the payment received for one's job or professional service, income includes this as well as other sources such as interest, dividends, rent, and any form of earnings. Thus, a person's income can include their salary, but also transcends it.
The concept of salary is often linked to formal employment and contractual work. It is a predetermined amount agreed upon by both the employee and employer. Income, in contrast, can be less predictable and can vary greatly based on different sources, which may not be guaranteed like a salary.
Salary is typically taxed differently than other forms of income. In many jurisdictions, it is subject to payroll or income tax, while other forms of income, such as capital gains or interest, might be taxed differently. This distinction is crucial in financial planning and tax considerations.
When discussing financial stability and budgeting, salary is often the primary consideration, as it is usually regular and predictable. Income, being more encompassing and variable, requires a broader view of financial management, considering all sources of monetary gain.
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Comparison Chart
Definition
Fixed payment for employment
Total earnings from various sources
Source
Employment
Employment, investments, gifts, etc.
Regularity
Typically regular and predictable
Can be regular or irregular
Taxation
Often subject to payroll tax
Diverse taxation depending on the source
Dependence on Job
Directly dependent on employment status
Can be independent of job status
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Variability
Generally fixed and agreed upon
Highly variable and dependent on different factors
Scope in Personal Finance
Primary consideration for budgeting and expenses
Broader scope, including all financial inflows
Salary and Income Definitions
Salary
Guaranteed payment from an employer to an employee for work performed.
Her monthly salary is directly deposited into her bank account.
Income
Total financial gain accrued from all sources, including employment and other earnings.
Her income increased significantly after she started her own business.
Salary
Monetary remuneration from an employer to an employee for services rendered.
The company reviews and potentially increases employees' salaries every year.
Income
The financial return received for providing goods or services or through investing capital.
They rely on both their regular income from jobs and seasonal income from freelance work.
Salary
A fixed regular payment made by an employer to an employee.
Her annual salary as a software engineer is $75,000.
Income
Aggregate earnings from salary, wages, investments, and other sources.
His total income last year was higher due to a profitable stock market investment.
Salary
Compensation for professional services, typically computed on a yearly basis.
He negotiated a higher salary before accepting the job offer.
Income
Money received, especially on a regular basis, for work or through investments.
His annual income includes his salary and dividends from investments.
Salary
Predetermined earnings from employment, not including bonuses or overtime.
The advertised position has a starting salary of $50,000 per year.
Income
Earnings obtained from labor, capital, or land, or from all three combined.
The family's income is a combination of both parents' salaries and rental income.
Salary
Fixed compensation for services, paid to a person on a regular basis.
Income
The amount of money or its equivalent received during a period of time in exchange for labor or services, from the sale of goods or property, or as profit from financial investments.
Salary
A fixed amount of money paid to a worker, usually calculated on a monthly or annual basis, not hourly, as wages. Implies a degree of professionalism and/or autonomy.
Income
The act of coming in; entrance.
Salary
To pay on the basis of a period of a week or longer, especially to convert from another form of compensation.
Salary
(obsolete) Saline.
Salary
Saline
Salary
The recompense or consideration paid, or stipulated to be paid, to a person at regular intervals for services; fixed wages, as by the year, quarter, or month; stipend; hire.
This is hire and salary, not revenge.
Salary
To pay, or agree to pay, a salary to; to attach salary to; as, to salary a clerk; to salary a position.
Salary
Something that remunerates;
Wages were paid by check
He wasted his pay on drink
They saved a quarter of all their earnings
FAQs
How is income different from salary?
Income includes salary and other earnings like investments, bonuses, and rent.
What defines a salary?
Salary is a fixed regular payment, typically monthly or yearly, from an employer to an employee.
Is overtime pay considered a salary?
Overtime pay is generally not considered part of the salary; it’s additional compensation.
Are bonuses part of a salary?
Bonuses are usually separate from salary and are considered additional income.
Can a person have income without a salary?
Yes, individuals can have income from sources other than salary, like investments.
Can income fluctuate while salary remains constant?
Yes, income can fluctuate due to changes in other earnings, while salary remains constant.
Does salary always come from formal employment?
Usually, salary is associated with formal employment contracts.
Do freelancers receive a salary?
Freelancers typically don’t receive a salary; they earn income based on services rendered.
Is pension considered a salary or income?
Pension is considered income, not salary, as it's not derived from current employment.
Is rental income part of salary?
No, rental income is separate from salary and falls under general income.
Is salary always a part of income?
Yes, salary is a component of income, contributing to total earnings.
Can income include non-monetary gains?
Yes, income can include non-monetary gains, though it primarily consists of monetary earnings.
Do investments count towards salary?
Investments contribute to income, not directly to salary.
Is commission considered salary?
Commission can be part of salary, especially in sales-oriented jobs.
How do taxes apply to salary and income?
Taxes on salary are typically deducted at source, while income tax is broader, covering all earnings.
How is salary determined?
Salary is usually determined by job role, experience, and industry standards.
Are dividends considered salary or income?
Dividends are a form of income, not salary.
Are gratuities part of salary?
Gratuities are generally not considered part of the fixed salary; they're additional income.
Can salary be the only source of income?
Yes, for some individuals, salary might be their sole source of income.
How do salary and income affect loan eligibility?
Both salary and total income are considered by lenders to determine loan eligibility.
About Author
Written by
Harlon MossHarlon is a seasoned quality moderator and accomplished content writer for Difference Wiki. An alumnus of the prestigious University of California, he earned his degree in Computer Science. Leveraging his academic background, Harlon brings a meticulous and informed perspective to his work, ensuring content accuracy and excellence.
Edited by
Janet WhiteJanet White has been an esteemed writer and blogger for Difference Wiki. Holding a Master's degree in Science and Medical Journalism from the prestigious Boston University, she has consistently demonstrated her expertise and passion for her field. When she's not immersed in her work, Janet relishes her time exercising, delving into a good book, and cherishing moments with friends and family.
