💵 Net Income Calculator
By ToolNimba Editorial Team · Reviewed by ToolNimba Review Team, financial statement and accounting content · Updated 2026-06-20
This calculator provides an estimate for planning and educational purposes only and is not financial, tax, accounting, or investment advice. Net income depends on how revenue and expenses are recognized under your accounting method, and on tax rules that vary by jurisdiction and entity type. Confirm every figure against your own books and review the result with a qualified accountant before relying on it for filings, financing, or business decisions.
Net income is the bottom line: what is left from your revenue after every expense, including the cost of goods sold, operating expenses, interest, and taxes, has been paid. Enter your revenue and each expense category, and this calculator returns your net income along with the net profit margin, which is net income as a percentage of revenue. It is the fastest way to see whether a business, a project, or a period actually made money.
What is the Net Income Calculator?
Net income sits at the very bottom of the income statement, which is why it is often called the bottom line. You start with total revenue, the money earned from selling goods or services, and then subtract costs in layers. First comes the cost of goods sold (COGS), the direct cost of producing what you sold, which leaves gross profit. Next you subtract operating expenses such as salaries, rent, marketing, and utilities to reach operating income. Finally you subtract interest on debt and income taxes, and what remains is net income.
The single formula behind all of this is net income equals total revenue minus total expenses, where total expenses bundle COGS, operating expenses, interest, and taxes together. This calculator keeps those categories separate so you can see where the money goes, but it simply adds them up and subtracts the sum from revenue. If expenses exceed revenue, net income is negative, which is a net loss rather than a profit.
Net profit margin turns the dollar figure into a percentage so you can compare periods or companies of different sizes. It is net income divided by revenue, multiplied by 100. A margin of 10% means the business keeps ten cents of profit from every dollar of sales after all costs. Margins vary widely by industry: grocery and retail often run on low single-digit margins, while software and other asset-light businesses can post margins well above 20%.
Net income is not the same as cash flow or gross profit, and it is easy to confuse them. Gross profit only subtracts COGS and ignores operating costs, interest, and tax. Cash flow tracks money actually moving in and out, which can differ from net income because of timing, non-cash charges like depreciation, and items recorded on an accrual basis. Net income is the accounting measure of profit for a period, and it is the number that flows into retained earnings and into per-share earnings for shareholders.
When to use it
- Checking whether a business or product line was profitable over a month, quarter, or year.
- Calculating net profit margin to compare performance across periods or against competitors.
- Estimating the bottom line for a budget or forecast before the period actually closes.
- Showing lenders or investors how much profit remains after all costs, interest, and taxes.
How to use the Net Income Calculator
- Enter your total revenue for the period.
- Enter the cost of goods sold, then your operating expenses.
- Enter interest expense and taxes, plus any other expenses if needed.
- Read off the net income, the net profit margin, and the total expenses.
Formula & method
Worked examples
A small business earns $500,000 in revenue, with COGS of $200,000, operating expenses of $120,000, interest of $15,000, and taxes of $40,000.
- Total expenses = 200,000 + 120,000 + 15,000 + 40,000 = $375,000
- Net income = 500,000 - 375,000 = $125,000
- Net profit margin = (125,000 / 500,000) x 100 = 25%
Result: Net income $125,000 at a 25% net profit margin
A startup brings in $80,000 of revenue but has COGS of $30,000, operating expenses of $65,000, no interest, and no taxes owed because it is at a loss.
- Total expenses = 30,000 + 65,000 + 0 + 0 = $95,000
- Net income = 80,000 - 95,000 = -$15,000
- Net profit margin = (-15,000 / 80,000) x 100 = -18.75%
Result: Net loss of $15,000, a negative net margin of -18.75%
How revenue and total expenses shape net income and net margin
| Revenue | Total expenses | Net income | Net margin |
|---|---|---|---|
| $100,000 | $70,000 | $30,000 | 30% |
| $250,000 | $225,000 | $25,000 | 10% |
| $500,000 | $375,000 | $125,000 | 25% |
| $1,000,000 | $980,000 | $20,000 | 2% |
| $80,000 | $95,000 | -$15,000 | -18.75% |
Where each cost is subtracted on the income statement
| Line | What it subtracts | Result |
|---|---|---|
| Revenue | Nothing yet | Starting point |
| Less COGS | Direct cost of goods sold | Gross profit |
| Less operating expenses | Salaries, rent, marketing | Operating income |
| Less interest | Cost of debt | Pre-tax income |
| Less taxes | Income tax owed | Net income |
Common mistakes to avoid
- Confusing net income with gross profit. Gross profit only subtracts the cost of goods sold and stops there. Net income goes all the way down, also subtracting operating expenses, interest, and taxes. Quoting gross profit as if it were the bottom line overstates how much the business actually kept.
- Treating net income as cash in the bank. Net income is an accounting figure that includes non-cash items like depreciation and revenue billed but not yet collected. Actual cash can be higher or lower, so always check cash flow separately before assuming the money is available to spend.
- Forgetting taxes or interest. Leaving interest expense or income taxes out of the calculation inflates the result. Both are real costs that come out before you reach net income, so a profit that looks healthy before tax can shrink considerably after it.
- Double counting an expense across categories. Putting the same cost in both COGS and operating expenses, for example counting warehouse labor twice, understates net income. Decide where each cost belongs and record it once so the total expenses figure is accurate.
Glossary
- Net income
- The profit left after all expenses, including COGS, operating expenses, interest, and taxes, are subtracted from revenue. Also called the bottom line or net profit.
- Revenue
- The total money earned from selling goods or services during a period, before any expenses are subtracted. Also called sales or the top line.
- Cost of goods sold (COGS)
- The direct cost of producing or buying the goods and services that were sold, such as materials and direct labor.
- Operating expenses
- The ongoing costs of running the business that are not tied directly to production, such as salaries, rent, marketing, and utilities.
- Net profit margin
- Net income divided by revenue, expressed as a percentage. It shows how many cents of profit remain from each dollar of sales.
- Net loss
- The result when total expenses exceed revenue, making net income negative for the period.
Frequently asked questions
What is net income?
Net income is the bottom line of the income statement: revenue minus every expense, including the cost of goods sold, operating expenses, interest, and taxes. It is the profit a business actually keeps for the period, and a negative result means a net loss.
How do I calculate net income?
Add up all your expenses (COGS, operating expenses, interest, and taxes) to get total expenses, then subtract that total from your revenue. For example, revenue of $500,000 minus total expenses of $375,000 gives net income of $125,000.
What is the difference between net income and gross profit?
Gross profit subtracts only the cost of goods sold from revenue, so it ignores operating expenses, interest, and taxes. Net income subtracts all of those as well, so it is lower than gross profit and represents the true bottom line.
How do I work out net profit margin?
Divide net income by revenue and multiply by 100. If net income is $125,000 on revenue of $500,000, the net profit margin is (125,000 / 500,000) x 100 = 25%, meaning the business keeps 25 cents of profit per dollar of sales.
Is net income the same as cash flow?
No. Net income is an accounting measure that includes non-cash charges like depreciation and revenue recognized before it is collected. Cash flow tracks money actually moving in and out, so the two can differ significantly even in the same period.
Can net income be negative?
Yes. When total expenses exceed revenue, net income is negative, which is called a net loss. This is common for new or fast-growing businesses that spend heavily before their sales catch up.
Sources
- Net Income (NI): Definition, Uses, and Formula , Investopedia
- Income Statement , U.S. Securities and Exchange Commission