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Finance Calc Kit
Business

Net Income Calculator

Calculate net income, operating profit, and profit after tax from revenue, costs, expenses, interest, and tax rate with step-by-step breakdown.

Revenue and direct costs

$
$

Operating expenses and interest

$
$

Taxes

%

Net income after tax

$24,500.00

From $100,000.00 revenue

Gross profit

$60,000.00

Operating income

$40,000.00

Net income before tax

$35,000.00

Profit taxes

$10,500.00

Revenue breakdown

Revenue$100,000.00
  • Cost of goods sold$40,000.0040.0%
  • Operating expenses$20,000.0020.0%
  • Interest expense$5,000.005.0%
  • Income taxes$10,500.0010.5%
  • Net income$24,500.0024.5%
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How to calculate net income for a business

Net income, also called the bottom line or profit after tax, is what remains after a company pays direct costs, operating expenses, interest, and income taxes. It appears on the income statement and is the starting point for earnings per share, retained earnings, and many valuation ratios.

This calculator walks from revenue through gross profit, operating income, pre-tax profit, and finally net income after applying your tax rate. To see how much of each revenue dollar becomes profit, pair it with the net profit margin calculator. For break-even revenue targets before profit, try the break-even calculator. To value a stream of future cash flows from a project, use the net present value calculator.

Net income formulas

Gross Profit=Revenue−Cost of Sales\text{Gross Profit} = \text{Revenue} - \text{Cost of Sales}
Operating Income=Gross Profit−Operating Expenses\text{Operating Income} = \text{Gross Profit} - \text{Operating Expenses}
Net Income=(Operating Income−Interest)×(1−Tax Rate100)\text{Net Income} = (\text{Operating Income} - \text{Interest}) \times \bigl(1 - \frac{\text{Tax Rate}}{100}\bigr)

Worked example

A company reports $100,000 in revenue, $40,000 in cost of goods sold, $20,000 in operating expenses, $5,000 in interest, and a 30% tax rate. Gross profit is $60,000. Operating income is $40,000. Pre-tax income is $35,000. Taxes equal $10,500, leaving net income of $24,500.

Frequently asked questions

What is the difference between operating income and net income?
Operating income reflects core business profitability before interest and taxes. Net income subtracts financing costs and income taxes to show earnings available to owners.
Should I use a statutory or effective tax rate?
Use the effective tax rate that best matches your situation. A flat statutory rate is fine for quick estimates; actual filings may include credits, deductions, and multi-jurisdiction rates.
Where does depreciation fit?
Depreciation is typically included in operating expenses unless you break it out separately. This calculator treats operating expenses as an aggregate line item.
Can net income be negative?
Yes. When costs and expenses exceed revenue, the business reports a net loss. The calculator still shows each intermediate step so you can see where the shortfall arises.

Resources and references

The formulas and methods in this calculator were checked against these independent sources.