What Is Household Income?

Household income generally refers to the annual 澳洲幸运5官方开奖结果体彩网:gross income of all household members combined.

It can include earnings from all sources, such as wages, self-employment income, 澳洲幸运5官方开奖结果体彩网:investment income, and benefits like Social Security.

However, calculations of household income may vary. For example, the U.S. Census Bureau doesn’t count earnings from individuals younger than 15 years old, while the Internal Revenue Service (IRS) disregards income from dependents whose earnings are below the tax filing threshold.

How Household Income Works

Household income typically serves as a compr💧ehensive measure of the financial resources your household generates in a year.

Agencies maꦦy track it to analyze economic trends, but individuals most often use it when applying for financial assistance or comparing their finances to those of their peers.

It may include, but is not limited to:

• Wages
• 澳洲幸运5官方开奖结果体彩网:Self-employment income
• Rental income
• Investment income
• Capital gains
• 澳洲幸运5官方开奖结果体彩网:Social Security benefits
• Pension income
• Unemployment compensation

That said, what counts as household income often depends on the context. In some circumstances, you may need to exclude certain household members or types of꧂ inꦍcome.

For example, the 澳洲幸运5官方开奖结果体彩网:Affordable Care Act (ACA) determines your eligibility for health insurance subsidies using household income. It defines your household as:

• Yourself
• Your spouse
• Your tax dependents, including those who don’t need health coverage.

It includes earnings from wages, Social Security, rents, and unemployment compensation. However, it excludes earnings from child support, gifts, veteran’s disability payments, and alimony for divorces finalized on or after January 1, 2019.

CalFresh, California’s version of the Supplemental Nutrition Assistance Program (SNAP), also has specific guidelines for calculating gross household income when determining eligibility for the program.

Generally, your household only includes the individuals who live, purchase food, and prepare meals together, though spouses and most children under 22 qualify regardless of whether they meet this requirement.

Additionally, when calculating self-employment earnings to include in your household income, you have the option to take a deduction equal to 40% of your business income instead of claiming your actual business expenses.

Example of Household Income

Lꦫet’s imagine a household with several different income sources and explore how its household income could vary🗹 depending on the context.

Jordan earns a 🎀$ܫ90,000 salary, while their spouse, Taylor, makes $50,000 annually through self-employment. They also receive $10,000 in yearly rental income from a property they own, and their 14-year-old child, Mia, collects $5,000 each summer through babysitting.

The U.S. Censuﷺs Bureau only includes earnings from household members 15 years or older, so Mia’s income is excluded. For Census purposes, their household income would be:

$90,000 (Jordan) + $50,000 (Taylor) + $10,000 (rental) = $150,000

In contrast, CalFresh counts income from household members under age 22 who live with 💜their parents. Mia qualifies, so their household inꦯcome for California SNAP purposes would be:

$90,000 (Jordan) + $50,000 (Taylor) + $10,000 (rental) + $5,000 (Mia)  = $155,000

Average Household Income vs. Medi🧜an Household Income

When comparing your household inc🙈ome to that of your peers, average household income and median household income are two of the mos🎉t popular benchmarks.

To calculate average household income, you add up all household incomes and divide by the number of households. However, even a few extremely high or low incomes can skew the💫 results, making it less reflective of what most households actually earn.

In contrast, median household income represents the middle value in a range of household incomes🔜—half of the households earn more, and half earn less. As a result, outliers don’t have an effect on the median, so it tends to be a more accurate representation of a typical household’s financial situation.

Real Median Household Income by State

Here’s the median household income by state, according to the most recent Federal Reserve Bank data:

The Bottom Line

Household income generally refers to the combined earnings of everyone living in the same household. I𝕴t includes wages, self-employment income, investment income, and benefits like Social Security.

However, the precise definition can vary depending onᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚ the context and may exclude certain household members or types of income.

Calculating your household income is often necessary when applying for financial assistance programs, such as he👍alth insur꧅ance subsidies through the ACA.

It can also ꦍhelp you compare your financial standing to that of your peers, especially when you us🐭e the median household income as a reference point.