Gross Income vs. Net Income

I admit, I had consistently paid my tithes on the net income rather than on the gross income until God rebuked me. I often argued (some Christians also do the same) by comparing tithing with the Income Tax system of the Government wherein income tax is imposed on the NET taxable income computed as follows: (sec. 31-35, National Internal Revenue Code of the Philippines)

1. ALL income
– Exclusion
= GROSS INCOME

2. Gross Income
– Allowable Deductions
= Net Income; (taxable net income in the case of corporation)

3. Net Income
– Less Personal and Additional
= Taxable Net Income;

4. Taxable Net Income
x Income Tax Rates (on graduated basis)
= Income Tax due;

5. Income Tax
– Creditable Withholding and/or Tax Credit
= NET TAXABLE INCOME.

GROSS INCOME pertains to ALL such gains, profits or income derived from any source. Income metaphorically is described as the “fruit” while capital is a “tree”.

The application of the rule that tithing must be based on our GROSS income is pursuant to Proverbs 3:9-10:

⁹ Honor the LORD with your wealth,
with the FIRSTFRUITS of all your crops;

The Lord requires our first fruits, which must be the FIRST and BEST of whatever we receive. Tithing shows that God is our priority. Therefore, if we pay our tithes based on net income, we put the government ahead of God.

Further, tithing is giving not only money but it can be non-cash assets such as stocks, property, etc. to support the work of God.

Related Articles:

Tithes before Taxes

Warren Buffet's (and Lorille’s) Advice to Young People