§ 61. Gross income defined

In plain English

Section 61 is short, about 140 words, and it may matter more than any other section. It defines gross income as all income from whatever source derived, then lists 14 examples: wages, business income, gains from selling property, interest, rent, royalties, dividends, pensions and more.

The list is only examples. The starting point is that everything counts, and money is left out only where another section says so. Examples are gifts and inheritances (§ 102), part of the gain on selling your home (§ 121), and some employer health benefits (§ 106).

Who it touches

Everyone. It matters most for people whose income doesn't arrive as a paycheck: freelancers, gig workers, creators, people paid in goods, services or crypto, and newcomers who still have income abroad.

Worked example

Jonas is a photographer. In 2026 he receives:

• $18,000 from clients through bank transfer: income
• $2,500 in a cryptocurrency, worth that much the day he received it: income, at its dollar value that day
• A $1,200 laptop from a client instead of cash: income (barter counts at fair market value)
• $3,000 his aunt gave him as a birthday gift: not income to him, because § 102 excludes gifts

His gross income from these is $21,700. Whether a 1099 form was ever sent doesn't change any of it.

Watch out for

• A missing 1099 or W-2 doesn't make money tax-free. The forms are reporting tools. They don't decide what counts as income.
• US citizens and residents are taxed on worldwide income, so foreign salary, rent or interest counts too. There are separate relief rules, such as the foreign earned income exclusion (§ 911) and foreign tax credits (§ 901).