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.