Net income is equal to the income that a company has after subtracting costs and expenses from the total revenue. Net income can be distributed among holders of common stock as a dividend or held by the firm as retained earnings.
It is computed as the residual of all revenues and gains less all expenses and losses for the period, and has also been defined as the net increase in shareholders' equity that results from a company's operations. It is different from gross income, which only deducts the cost of goods sold from revenue.
For households and individuals, net income refers to the (gross) income minus taxes and other deductions (e.g. mandatory pension contributions).