Net Income Calculator
For business profit: This calculator models a business income statement. Personal salary take-home pay also involves payroll taxes and deductions and requires a paycheck calculator.
Income statement inputs
1. Revenue and cost of sales
Gross profit: £4,000.00
2. Operating expenses
Operating income: £1,500.00
3. Interest, other items, and taxes
Results
Calculation steps
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How to calculate net income
Start with revenue and follow the income statement from top to bottom: subtract COGS for gross profit; subtract operating expenses and D&A and include other operating items for operating income; subtract net interest and include non-operating items for earnings before tax (EBT); then subtract tax for net income.
| Measure | Formula |
|---|---|
| Gross profit | Revenue − COGS |
| Operating income (EBIT) | Gross profit − operating expenses − D&A + other operating items |
| EBT | Operating income − (interest expense − interest income) + non-operating items |
| Tax | EBT × effective tax rate (subject to the loss assumption) |
| Net income | EBT − tax |
Worked net income example
A business has $100,000 revenue, $40,000 COGS, $20,000 operating expenses, $5,000 interest expense, and a 30% tax rate. With no D&A or other items:
Gross profit = $100,000 − $40,000 = $60,000
Operating income = $60,000 − $20,000 = $40,000
EBT = $40,000 − $5,000 = $35,000
Tax = $35,000 × 30% = $10,500
Net income = $35,000 − $10,500 = $24,500
Net income vs NOPAT vs EBITDA
Net income is the accounting bottom line after operating costs, financing, non-operating items, and tax. NOPAT applies tax to operating income but deliberately excludes financing and non-operating items, making it useful for comparing operations under different capital structures. EBITDA is earlier in the income statement and excludes interest, tax, depreciation, and amortization. None is the same as cash flow because accrual accounting includes non-cash and timing items.
Common mistakes and assumptions
- Use the same period and currency for every amount.
- Enter expenses as positive amounts; enter losses in “other” fields as negative amounts.
- The tax input is a simplified effective rate, not a tax return calculation. The default loss setting does not estimate tax benefits.
- Net profit margin is calculated only when revenue is greater than zero.
Reviewed and updated: 12 July 2026 by the Starlight Tools editorial team using standard income-statement relationships. Calculations run locally in your browser. This calculator is for educational planning only, not accounting, tax, investment, or financial advice; check material decisions with a qualified professional.
Net income calculator FAQ
What is net income?
Net income is the profit or loss remaining after a business subtracts operating costs, interest, non-operating items, and taxes from revenue for a period.
What is the net income formula?
Net income equals revenue minus COGS, operating expenses, depreciation and amortization, net interest, and taxes, plus or minus other operating and non-operating items.
How do I calculate net income from revenue and expenses?
Subtract COGS from revenue for gross profit, subtract operating expenses and depreciation for operating income, adjust for interest and non-operating items for EBT, then subtract tax.
What is the difference between gross profit, operating income, and net income?
Gross profit subtracts only COGS from revenue. Operating income also subtracts operating expenses. Net income additionally includes financing, non-operating items, and taxes.
Is net income the same as profit?
Net income is commonly called net profit or the bottom line. “Profit” alone can also mean gross profit or operating profit, so context matters.
What does negative net income mean?
It means the business recorded a net loss for the period because total costs, expenses, and taxes exceeded income. A loss is not automatically the same as negative cash flow.
What is net profit margin?
Net profit margin is net income divided by revenue, expressed as a percentage. It shows how much bottom-line profit or loss remains from each unit of revenue.
How is NOPAT different from net income?
NOPAT applies tax to operating income and ignores financing and non-operating items. Net income includes those items, so interest and one-off gains or losses can make the two differ.