1. The amount an individual can spend in a period while leaving his or her capital unchanged. For an individual with neither assets nor debts, personal income can be defined as receipts from wages, or earned income, plus receipts from transfers, such as pensions. Taxable income is this less any tax allowances. Net or disposable income is income after payment of direct taxes. Real income is money income deflated by a consumer price index, to find its purchasing power at constant prices. For an individual with assets or debts, income from rent, dividends, and interest, or unearned income, has to be added to earned and transfer income. Interest paid out should logically be deducted, though actual tax systems tend to restrict such deductions. For individuals with real or financial assets, the distinction between receipts which are treated as income and those which are treated as capital gains is a highly technical and often arbitrary matter. For individuals with financial assets consisting of money or securities whose value is denominated in money terms, interest received should logically have losses in real purchasing power due to inflation deducted in measuring their real income. Tax systems, however, generally ignore this point and treat cash receipts as income.

2. The receipts of firms or public corporations from sales or payments of interest and dividends by other firms. These appear as the income side in income and expenditure accounts. Only any net profits in these accounts can be considered to be income in a sense comparable with individual incomes.

3. A macroeconomic aggregate, equal to the sum of individual earned and unearned incomes, the undistributed profits of companies, and property income accruing to the government. See also circular flow of income; disposable income; earned income; factor incomes; imputed income; permanent income; real income; taxable income; unearned income.