Explain the difference between gross income and net income.

Question: Explain the difference between gross income and net income.

Gross income is the total amount of income earned before any deductions or taxes are applied. It includes all sources of income, such as wages, salaries, bonuses, and any other income before taxes. On the other hand, net income, often referred to as take-home pay, is the amount of income that remains after all deductions, including taxes, social security, health insurance, and any other payroll deductions, have been subtracted from the gross income. Essentially, net income is the money an individual or business retains after all expenses and taxes have been paid. Understanding the difference between these two figures is crucial for budgeting, tax preparation, and financial planning.

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