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Ordinary Income Definition

January 6, 2022

What Is Ordinary Income?

Ordinary income is any type of income earned by an organization or an individual that is taxable at ordinary rates. It includes (but is not limited to) wages, salaries, tips, bonuses, commissions, rents, royalties, short-term capital gains, unqualified dividends, and interest income.

Understanding Ordinary Income

Ordinary income comes in two forms: personal income and business income.

Personal ordinary income can be defined as any kind of cash inflow that is subject to the standard marginal income tax rates, as outlined by the Internal Revenue Service (IRS).

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