How to Calculate Your Tithe on Gross or Net Income

A tithe represents a portion of income, traditionally one-tenth, given to a religious organization. This practice contributes to the support of religious and charitable activities. It serves as a financial commitment rooted in spiritual principles, allowing individuals to participate in the sustenance of their faith community. The calculation of this amount is a personal financial decision, often influenced by individual interpretation of religious guidelines.

Understanding Your Tithable Income

Determining your tithable income involves understanding the difference between gross and net income. Gross income refers to your total earnings before any deductions are taken out. This includes your salary, wages, bonuses, commissions, and any other income received prior to taxes or other withholdings. Net income, conversely, is the amount of money you receive after all deductions, such as taxes, FICA, and pre-tax contributions, have been applied. The decision to tithe on gross or net income is a personal one, with some adherents choosing gross income to reflect a “firstfruits” principle, while others opt for net income, considering it the true amount they “receive.”

Beyond regular wages, many other types of income are commonly considered tithable. These can include interest earned from savings accounts or investments, dividends from stocks, and profits from the sale of assets like stocks or bonds. For individuals who receive income from multiple sources, the tithing principle typically applies to all forms of financial increase.

Conversely, certain financial inflows are generally not considered tithable income. Gifts received, loans, inheritances, and reimbursements for expenses are often excluded. For instance, if you receive a gift, it is typically viewed as a transfer of existing wealth rather than newly generated income. Similarly, a loan is money that must be repaid, not a personal increase. The guiding principle for exclusion often revolves around whether the money represents an actual increase or profit to the individual.

Calculating Your Tithe Amount

Once you have identified your tithable income, the next step is to calculate the specific amount of your tithe. The traditional tithe amount is 10% of your chosen income base. For example, if your monthly gross income is $4,000, a 10% tithe would be $400. If you choose to tithe on a net income of $3,000, the tithe would be $300.

The frequency of your tithe calculation often aligns with how regularly you receive your income. Many individuals calculate and give their tithe weekly, bi-weekly, or monthly, corresponding to their pay periods. For those with less frequent income, such as quarterly bonuses or annual dividends, the tithe can be calculated and given when that income is received.

To adjust the calculation for different frequencies, simply apply the 10% rate to the tithable income received during that specific period. For instance, if you are paid bi-weekly, you would calculate 10% of your tithable income from each bi-weekly paycheck. This consistent application ensures that the tithe remains proportional to your earnings over time.

Addressing Different Income Sources

Calculating tithable income can become more nuanced when dealing with less conventional income streams. For self-employed individuals or business owners, determining tithable income typically involves identifying net profits rather than gross receipts. This means that legitimate business expenses, such as operating costs, supplies, and salaries paid to employees, are generally deducted from the gross revenue before calculating the tithe. The tithe is then applied to the remaining profit, which represents the actual increase from the business activity.

When considering capital gains, such as profits from the sale of stocks or other investments, the tithable amount is usually based on the realized gain, not the total sale price. This involves subtracting the original cost basis of the asset from its selling price to determine the profit. For example, if an investment bought for $1,000 is sold for $1,500, the tithable gain would be $500. This approach aligns with the principle of tithing on actual financial increase.

Rental income also requires careful consideration, with the tithe typically calculated on the net income after deducting property-related expenses. These expenses can include mortgage interest, property taxes, insurance, maintenance costs, and even depreciation. The net rental income, after accounting for these expenditures, is the base upon which the tithe is calculated, reflecting the true profit generated by the property.