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How To Calculate Your Gross Monthly Income?

Last modified: Sep 29, 2022

If you're looking for a way to calculate your monthly gross income, you’re in the right place. This article will give you information on: 

  • What gross monthly income is   
  • Why it's important to know how to calculate your gross monthly income 
  • How to figure out your net income and tell the difference between the gross and net income.  

What Is Monthly Gross Income?

Gross monthly income is what you earn every month before taxes and deductions are taken out. This means that your salary or hourly rate will be counted as gross, not what you actually get after the deductions have been made. 

Common deductions include: 

  1. Federal Income Tax– What you pay to the government every month based on your income.
  2. Social Security and Medicare (FICA taxes)– What you and your employer pay to support social security and medicare. 
  3. Insurance Deductions– What you contribute monthly towards insurance.
  4. State Income Tax– What you pay to your state government every month based on your income. 
  5. Social Security– Replaces a percentage of your pre-retirement income based on your lifetime earnings.
  6. Retirement Plans– Savings plan with tax advantages suited for retirement.

There are also deductions known as 'post-tax deductions', which are taken from an employee’s paycheck after all required taxes have been withheld. However, since post-tax deductions reduce net pay instead of gross pay, they don’t lower the individual’s overall tax burden.   

Although, instead of deductions, you might sometimes get ‘inclusions’ in your payroll. Most commonly, you'd get:

  1. Bonuses
  2. Commissions
  3. Vacation/Holiday Pay
  4. Sick Pay
  5. Extra pay for overtime work

Why Should You Calculate Gross Income?

Calculating your net wages can help give you an idea of where to cut corners to save money for emergencies and other things like paying off credit card bills quicker. 

In addition, it is important to know what your gross income is when you're applying for a mortgage or car loan. Mortgage lenders and landlords will use your gross income to determine your financial reliability.  

  • LoansWhen you're applying for a loan, the lender will want to know what your income is. This lets them know how much money they can expect you to pay back each month and whether or not you'll be able to afford the monthly payments. 
  • MortgageYour mortgage lender will look at gross income when considering what to offer you for a mortgage. The higher your earnings, the better your chance of getting a bigger loan with a lower interest rate.    
  • Retirements– When you retire, your income will depend on what it was while you were working. If the bulk of what you made in a year came from commission and bonuses, then that's what your retirement will also consist of.
  • Planning Savings & Budget– When you're trying to save money each month, it's important to have an idea of what your regular expenses are. This includes knowing how much money goes out for rent/mortgage, groceries, and bills. Once you know this number, subtract it from your monthly gross income to get a ballpark figure for what you could potentially put away in savings.    

How to Calculate Gross Monthly Income?

Now that we've answered what gross monthly income is, let's move on to how to calculate it.

How to Calculate Gross Monthly Income From Hourly Wage 

To determine gross monthly income from hourly wages, you need to know your yearly pay. You can do so by multiplying your hourly wage rate by the number of hours worked in a week. The resulting number can be multiplied by 52 for the weeks in the year. The final result can be divided by 12. Here's the gross income formula: 

Gross income per month = (Hourly pay) x (Hours/ weeks) x 52 /12

How to Calculate Gross Monthly Income From Weekly and Bi-weekly Wages

Suppose you're looking at how to calculate monthly income from weekly paychecks. All you've got to do is multiply the number of hours you've worked in a week by how much your hourly wage is. Do that, and you get your gross monthly income.

However, if you’re paid bi-weekly, you need a different formula to figure out how to calculate your gross monthly income. First, you need to figure out your gross pay for the two weeks. Then, you need to multiply the number by 26 (since there are 26 two-week periods in a year), divide it by 12 (12 months), and what you're left with is your gross monthly income. 

How to Calculate Gross Monthly Income From Annual Salary

If you're based on an annual salary, the simplest way to calculate gross monthly income is to divide your annual salary by 12. The number you get is your current gross monthly income.  

Gross vs. Net Income

Surprisingly, many people still don't know the difference between gross and net incomes/salaries. Simply put, your gross income is what you get before any deductions have taken place (think taxes). Your net income refers to the funds you actually get to take home.

Revenue vs. Profit

Now let's look at gross monthly revenue and the difference between monthly revenue and profit.

Gross monthly revenue refers to the total amount of a company's sales revenue for one month. This does not include damaged, returned, or otherwise lost goods, and when subtracted from the gross revenue, you end up with your net monthly income.

After considering expenses, debts, additional income streams, and operating costs and subtracting them from your gross monthly revenue, the amount you're left with is your profit for that month. 


This article covered everything from learning how to calculate your gross monthly income, the difference between gross and net incomes, and the difference between revenue and profit. These are all valuable pieces of information that will allow you to better understand your financial situation and what it does and doesn't allow for.


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