When we think of wages or income we all like to figure out how much money we will make by multiplying our hourly wage times the number of hours we work. For example 40 hours times $8.00 per hour (40.00x$8.00=$320.00) However if you have a job or talk to anyone who has one you will quickly realize that your pay check has federal taxes, state taxes and local taxes deducted, so that 320.00 dollars you earned ends up being around 260.00 that you actually have to spend.
This is the difference between
GROSS INCOME- An individual's total personal income before taking taxes or deductions into account.
and
NET INCOME- An individual’s income after deductions, and taxes are taken out from the gross income.
