ordinary income

Ordinary income

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

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.

ordinary income

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

ordinary income

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