Gross Monthly Income: what it is and how to calculate it 

Calculating gross monthly income can be a big challenge for many people.

This is because gross income is rarely mentioned, as net income is much more commonly used in everyday life.

But what is the difference between these two concepts? Where is gross income used? Why is it necessary to know how to calculate it?

All of these questions are quite relevant, and they will be answered throughout this content.

So, if you want to learn how to accurately calculate your income and master the subject, come with us!

What is gross monthly income? 

You've certainly heard someone talk about gross monthly income before.

Generally, this topic is accompanied by the phrase "this considers net income, not gross income".

Therefore, little is said about gross income, since most procedures require net income.

And on that note, it's easy to understand that net income is what's left over after deductions.

But what about gross income? Is that the total income, without deductions?

Yes, that statement is correct, since gross monthly income consists of total receipts, free of deductions.

However, it's worth mentioning that when we talk about gross income, we're not referring to the income of just one person.

This is because gross monthly income considers all the money received within a family group.

Therefore, the following items are included in gross income:

• Salaries of all members of the family group, before deductions;
• Overtime;
• Child support;
• Pension insurance;
• Funds received into the account independently;
• Receipts by CNPJ (Brazilian company tax ID); 
• Between others.

This makes it easy to understand that all the income received by the family group constitutes the gross income.

In this way, a general collection of data is obtained, which makes up the overall income of the group.

Discounts that can be applied to gross monthly income. 

Throughout the previous topic, we were able to understand that gross income is the sum of all income received before deductions.

This means that to find net income, you first need to calculate gross income.

Based on this calculation, discounts are applied, resulting in the actual income.

We call it real income because net income is the amount that actually "goes into the account".

This is because, as we well know, gross income is not received in full.

Before receiving the payment, certain amounts are deducted, which ultimately reduces the initial sum.

And that's the reason why many procedures and requests consider net income.

This is because considering total income is not as accurate, since the full amount is not received.

We will now see what deductions may be applied to the gross monthly income.

Income tax 

Income tax is a tax levied on taxable assets and income.

Therefore, when we talk about taxable income, we include gross monthly income.

If gross income exceeds the minimum exemption amount, The percentage for income tax will be deducted.

It is worth mentioning that this percentage varies according to each income bracket, with a rate ranging from 7.5% to 27.5%.

To find out how much of your income tax discount will be, it's worth checking the updated table published by [the relevant authority]. Federal Revenue.

INSS

The INSS (Brazilian Social Security) discount is applied to the salaries received by employees with formal employment contracts.

This discount is earmarked for contributions to the country's social security system.

In this way, the deducted amounts are recorded and serve as contribution time for a future retirement.

It's worth mentioning that INSS discount It also protects you in cases of illness, leave due to accident, unemployment insurance, maternity leave, among others.

Therefore, when calculating your gross monthly income, consider Social Security (INSS) as the first item on the list. 

Transportation voucher 

The amount corresponding to the transportation voucher can also be deducted from the gross monthly income.

It's worth mentioning that this discount depends on the union representing the category, as some do not allow it.

However, the general rule is that the transportation voucher deducts 6% from the gross salary amount, after the INSS (Brazilian Social Security) deduction.

Therefore, this amount varies according to your salary, and if you do not use this benefit, it is not deducted.

Percentage of meal/food allowance 

Few people know this, but it's very common for meal/food allowances to deduct a portion from gross monthly income.

This discount varies greatly depending on the company and the trade union.

Thus, some companies offer discounts, while others prefer not to.

But, as a rule, this discount can be applied in the following way:

• Discount related to x days of benefit, based on the daily allowance paid;
• Discount of up to 20% from the total monthly allowance amount.

Therefore, when considering your gross income, remember to check the deduction for your meal voucher or food voucher! 

Co-participation in agreements

Another item that frequently appears in monthly gross income deductions is what's called co-participation.

Coparticipation is the portion that the employee is responsible for paying when using the health plan provided by the company.

This type of agreement can be for medical, dental, or even pharmacy services.

In any case, with copayment you pay a percentage related to the consultation or the total cost of using the health plan.

It's worth mentioning that in many cases, co-payment is made for each use.

However, in other cases, a fixed monthly percentage may be deducted.

How to calculate your gross monthly income.

By now you should know what the main deductions are from your gross monthly income.

These deductions are what transform gross income into net income.

But even knowing what the deductions are, it's still not so obvious how to calculate gross income.

Therefore, we are now going to help you by showing you how you should do it.

The first thing to do is to gather all the deductions made from your payslip.

As we said, each case has specific discounts, at their own percentages.

Therefore, it's important that you take yours and do the calculations.

Simply add the discount amounts to the net amount, and you will have access to your gross salary.

But, as we've already said, gross monthly income doesn't only consider your salary.

Therefore, you will need to gather information on all income received by your family group.

Therefore, calculate gross salaries, pensions, benefits, and anything else you may have.

By doing the overall calculation, you will have access to your total gross monthly income! 

On what occasions is the gross monthly income used?

Calculating gross monthly income isn't that difficult, as it simply requires gathering information about monthly earnings.

However, it is not uncommon for questions to arise as to why this calculation should be done.

After all, if gross income comes before deductions, then it doesn't reach anyone's hands, so why would it matter?

Wouldn't it be simpler and more obvious to consider only the net income, which is what is actually used in the month?

Therefore, the reason for considering gross income is that it is requested for some services and procedures.

The reason for this is to determine the income bracket to which a family group belongs.

Gross monthly income includes all earnings for this group, and we must remember that deductions may vary.

Therefore, it may be safer and more practical to consider gross payment.

We will now see in which main cases gross income is indispensable: 

• Home financing 
• Application for social benefits 
• Rent 

So, if you're thinking about requesting any of these services, be sure to calculate your gross monthly income!