ordinary income

Ordinary income

The income derived from the regular operating activities of a firm or individual.

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ordinary income

Income that does not qualify for special tax treatment. Wages, dividends, and interest are ordinary income.

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Ordinary Income

In taxation, income from wages or salaries, interest, or commissions. Ordinary income is received in the short-term; for example, one usually receives a paycheck every two weeks or interest on a bond a few times per year. Ordinary income differs from capital gain, which is income from investment and is usually realized over a longer period of time. Most ordinary income is taxed at a higher rate than capital gain, so as to encourage long-term investment. In the United States, dividends were taxed as ordinary income, but this changed in 2003. One may think of ordinary income as income from one's job and/or standard business transactions.

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ordinary income

Income subject to full or ordinary taxation rates. Contrast with capital gains.