Do You Pay Tithes on Gross or Net Income?

Tithing is a traditional practice of giving a portion of one’s income, often to religious organizations. A common question is whether to calculate the tithe based on gross income (before deductions) or net income (after withholdings). There is no single universally mandated answer, and understanding both gross and net income is a foundational step in addressing this decision.

Understanding Gross and Net Income

Gross income represents the total money an individual earns from all sources before any taxes, deductions, or withholdings. This comprehensive figure includes salary, wages, bonuses, commissions, self-employment income, investment income (like interest and dividends), and rental income.

Net income, often called “take-home pay,” is the amount an individual receives after deductions and taxes are subtracted from gross income. Common mandatory deductions include federal, state, and local income taxes. Federal Insurance Contributions Act (FICA) taxes for Social Security and Medicare are also withheld. Beyond these, pre-tax deductions for health insurance premiums, retirement accounts like a 401(k), and other benefits also reduce gross income to arrive at net income.

Tithing Based on Gross Income

Tithing on gross income is rooted in the “first fruits” principle, suggesting the initial portion of earnings be set aside for religious giving before any deductions. This perspective emphasizes that all income originates from a higher power, and giving from the full amount demonstrates a deeper trust and commitment.

Many religious traditions advocate for this method, viewing it as a tangible expression of faith and a recognition of divine provision. This approach encourages individuals to prioritize their giving, placing it before other financial obligations like taxes or living expenses. It reflects a belief that giving before deductions aligns with historical interpretations of tithing, where agricultural produce was given as a first offering.

Tithing Based on Net Income

Tithing on net income focuses on the amount an individual has available after essential obligations are met. This perspective suggests calculating the tithe on “actually received” or disposable income, rather than the total earned before mandatory deductions. Arguments for this approach consider the practical realities of modern personal finance, where a significant portion of gross income is withheld for taxes and other necessary expenses beyond individual control.

Proponents of tithing on net income argue that mandatory deductions, such as federal, state, and local income taxes, as well as Social Security and Medicare contributions, are not truly part of an individual’s usable income. These are legally required payments to governmental authorities. Therefore, tithing should apply to the income remaining after these non-discretionary payments, recognizing that individuals must meet their civic responsibilities first.

Making Your Personal Tithing Decision

The decision of whether to tithe on gross or net income is ultimately personal, influenced by individual conviction, financial circumstances, and religious guidance. There is no single universally accepted directive, allowing for flexibility based on personal interpretation and financial capacity.

Individuals can consider their financial situation, including their budget, debt obligations, and savings goals. Personal reflection to align the practice with one’s beliefs is also important. Seeking counsel from religious leaders or financial advisors can provide additional perspectives and support in arriving at a decision that resonates with individual values and capabilities.