what is net income ni 
net income ni also called net earnings is a useful number for investors to assess how much revenue exceeds the expenses of an organization the formula to determine net income is sales minus cost of goods sold selling general and administrative expenses operating expenses depreciation interest taxes and other expenses net income appears on a company s income statement and is an indicator of a company s profitability net income also refers to an individual s income after taking taxes and deductions into account laura porter investopediaunderstanding net income ni businesses use net income to calculate their earnings per share eps business analysts often refer to net income as the bottom line since it is at the bottom of the income statement analysts in the united kingdom know ni as profit attributable to shareholders net income ni is known as the bottom line as it appears as the last line on the income statement once all expenses interest and taxes have been subtracted from revenues calculating net income for businessesto calculate net income for a business start with a company s total revenue from this figure subtract the business s expenses and operating costs to calculate the business s earnings before tax deduct tax from this amount to find the ni net income like other accounting measures is susceptible to manipulation through such things as aggressive revenue recognition or hiding expenses when basing an investment decision on ni investors should review the quality of the numbers used to arrive at the taxable income and ni to ensure that they are accurate and not misleading personal gross income vs net incomegross income refers to an individual s total earnings or pretax earnings and ni refers to the difference after factoring deductions and taxes into gross income to calculate taxable income which is the figure used by the internal revenue service irs to determine income tax taxpayers subtract deductions from gross income the difference between taxable income and income tax is an individual s ni 1for example an individual has 60 000 in gross income and qualifies for 10 000 in deductions that individual s taxable income is 50 000 with an effective tax rate of 13 88 giving an income tax payment of 6 939 50 and ni of 43 060 50 net income on tax returnsin the united states individual taxpayers submit a version of form 1040 to the irs to report annual earnings this form does not have a line for net income instead it has lines to record gross income adjusted gross income agi and taxable income 2after noting their gross income taxpayers subtract certain income sources such as social security benefits and qualifying deductions such as student loan interest the difference is their agi although the terms are sometimes used interchangeably net income and agi are two different things taxpayers then subtract standard or itemized deductions from their agi to determine their taxable income as stated above the difference between taxable income and income tax is the individual s ni but this number is not noted on individual tax forms most paycheck stubs have a line devoted to ni this is the amount that appears on an employee s check the number is the employee s gross income minus taxes and any contributions to accounts such as a 401 k or health savings account hsa 