When a form, lender, or landlord asks whether your monthly income is before or after taxes, the answer is almost always before taxes. “Monthly income” defaults to gross income — your total earnings before any withholding or deductions — unless the document specifically calls for take-home pay, disposable earnings, or a defined tax figure like adjusted gross income. Courts enforcing wage garnishments and a handful of benefit programs are the main exceptions.
What Counts as Gross Monthly Income
Gross monthly income is everything you earn in a month before anything comes out of your paycheck. Federal tax law defines gross income broadly as all income from any source, including wages, business earnings, interest, dividends, rents, and retirement distributions.1Office of the Law Revision Counsel. 26 U.S.C. 61 – Gross Income Defined For a salaried worker, it is annual base pay divided by twelve.
The gross figure includes money you never actually see. Federal and state tax withholdings, Social Security and Medicare taxes, health insurance premiums, and 401(k) contributions are all part of gross income because they are subtracted after the total is calculated.2Internal Revenue Service. Retirement Topics – 401(k) and Profit-Sharing Plan Contribution Limits When a form asks for “monthly income” with no further explanation, this is the number it wants.
What Net Monthly Income Is
Net monthly income, often called take-home pay, is what actually reaches your bank account. Mandatory withholdings come out first: federal and state income taxes, plus FICA taxes at 6.2% for Social Security and 1.45% for Medicare on the employee side.3Office of the Law Revision Counsel. 26 U.S.C. 3101 – Rate of Tax The Social Security portion applies only to the first $184,500 of earnings in 2026.4Social Security Administration. Contribution and Benefit Base
Voluntary pre-tax deductions shrink take-home pay further. 401(k) contributions reduce taxable wages before withholding is calculated.5Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 Cafeteria-plan Health Savings Account contributions are excluded from gross income on your W-2 as well.6Internal Revenue Service. Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans Because these choices vary so much, two workers with identical salaries can have very different net figures.
When You Report Gross Income
Mortgage Applications
Mortgage lenders use gross monthly income to calculate your debt-to-income ratio, comparing your recurring debts against pre-tax earnings. For conventional loans sold to Fannie Mae, the maximum DTI is 50% under automated underwriting.7Fannie Mae. Debt-to-Income Ratios Gross is used because it standardizes the comparison across borrowers with different tax and benefit elections.
Rental Applications
Landlords typically require gross monthly income equal to at least three times the monthly rent. If the rent is $1,800, expect to show at least $5,400 in gross earnings. Take-home pay is not the benchmark because it varies too widely with individual tax and retirement choices.
Bankruptcy Filings
Federal bankruptcy uses a defined term, “current monthly income,” which is the average of your gross income from all sources over the six months before filing, whether or not that income is taxable. It also picks up regular payments others make toward your household expenses. It excludes Social Security benefits and certain payments to victims of crimes or terrorism, along with some military disability pay.8Office of the Law Revision Counsel. 11 U.S.C. 101 – Definitions This figure decides whether you qualify for Chapter 7 or must file Chapter 13.
When Net or a Special Figure Applies
Wage Garnishment
Federal garnishment caps are based on “disposable earnings,” meaning the amount left after everything your employer is legally required to withhold — taxes, Social Security, and Medicare.9Office of the Law Revision Counsel. 15 U.S.C. 1672 – Definitions Voluntary items like 401(k) contributions or extra insurance are not subtracted in that calculation.
For ordinary consumer debts, the maximum garnishment is the lesser of 25% of disposable earnings or the amount by which those earnings exceed 30 times the federal minimum wage in a given week. Child support and alimony orders can reach 50% or 60% of disposable earnings depending on whether you support another spouse or child, with an added 5% if you are behind by more than 12 weeks.10Office of the Law Revision Counsel. 15 U.S.C. 1673 – Restriction on Garnishment Federal and state tax debts fall outside these caps.
Child Support
State rules control here, and they split. A majority of states use the “income shares” model; among those, roughly two-thirds base guidelines on gross income and the remaining third start with net. Even states labeled “net income” often begin with gross and then apply a formula to estimate after-tax earnings. Check your state’s guidelines or the specific court order to see which number applies.
Benefits Programs and MAGI
Federal assistance programs measure eligibility against the federal poverty level. For 2026, the FPL for a single-person household in the 48 contiguous states is $1,330 per month, or $15,960 annually.11U.S. Department of Health and Human Services. 2026 Poverty Guidelines Programs like Medicaid and marketplace insurance subsidies set cutoffs at percentages of the FPL, such as 138% or 400%.
These programs use Modified Adjusted Gross Income (MAGI), which starts with the adjusted gross income on line 11 of your Form 1040 and adds back untaxed foreign income, non-taxable Social Security benefits, and tax-exempt interest.12HealthCare.gov. Modified Adjusted Gross Income (MAGI) MAGI is not a single line on your return, though for many filers it is close to AGI. For marketplace premium tax credits, MAGI is the deciding number, not gross pay and not take-home pay.
How to Calculate Your Monthly Figure
The method depends on how you are paid, but the approach is the same: find your annual total, then divide by twelve.
- Hourly: multiply your hourly rate by weekly hours, then by 52, then divide by 12. At $25 an hour and 40 hours a week, that comes to $52,000 a year, or about $4,333 a month.
- Biweekly: multiply gross pay per check by 26, then divide by 12. This smooths out the months with three paychecks.
- Salaried: divide annual salary by 12.
- Irregular earnings: add up bonuses, commissions, or freelance payments over the most recent full year and divide by 12.
Each of these produces gross monthly income. To estimate net, subtract federal and state income tax withholdings, FICA taxes, and any other mandatory deductions.
If You Are Self-Employed
Self-employment adds a step because no employer is withholding for you. On IRS Schedule C, gross receipts go on line 1, and after subtracting allowable business expenses you arrive at net profit on line 31.13Internal Revenue Service. Instructions for Schedule C (Form 1040) Net profit, not gross receipts, is the earned-income figure that counts for tax purposes and most applications.
Self-employed workers also pay both halves of Social Security and Medicare — a combined 15.3% on net earnings up to the $184,500 Social Security wage base, plus 2.9% Medicare on net earnings above that.14Social Security Administration. If You Are Self-Employed When a lender asks for gross monthly income, you generally supply Schedule C net profit divided by twelve, since business expenses are not personal income. Confirm with the specific lender, because some treat gross receipts differently.
Which Documents Prove Which Number
Different documents show different versions of your income, and knowing which one an application wants prevents delays.
- Pay stubs list gross earnings, itemized deductions, and year-to-date totals for each pay period. They are the standard proof of current income.
- W-2 forms report annual wages and taxes withheld. Box 1 shows taxable wages, which may be lower than gross pay because pre-tax retirement and health plan contributions have already been removed.15Internal Revenue Service. Form 1099-NEC and Independent Contractors
- 1099-NEC forms go to independent contractors paid $2,000 or more during 2026 (up from $600 for payments made after December 31, 2025). Because no taxes are withheld, the reported amount is gross.16Internal Revenue Service. 2026 Publication 1099
- Form 1040 gives the full picture. Line 9 is total income; line 11 is adjusted gross income after above-the-line deductions like student loan interest and deductible retirement contributions.17Internal Revenue Service. Adjusted Gross Income
- A Social Security benefit verification letter confirms your monthly benefit before and after Medicare premium deductions, and most landlords, lenders, and benefit programs accept it.
Check whether the application specifies a time frame. Lenders often want the two most recent pay stubs plus the prior year’s W-2 or tax return, and courts may ask for several years of returns to assess earning trends.