Household income is defined as the total gross earnings of all individuals who are 15 years or older and living in the same household. This includes not only family members, but also any non-relatives who reside in the same home. All sources of income, such as salaries, wages, bonuses, investments, and government benefits, are taken into account when calculating household income. This means that even if a non-relative is contributing to the household's expenses, their income will still be included in the total household income.

The definition of household income can vary depending on the specific circumstances. In some cases, it may be defined by laws or regulations, while in others it may be determined by researchers or authors. This can lead to variations in what is included or excluded when calculating household income.

In some cases, it may include all sources of income for everyone living in a household, such as salaries, investments, and government assistance. However, in other cases, certain income items may be excluded, such as non-taxable income or income from non-working family members. To give you a better understanding, here are a few examples of how household income may be defined:

When determining the average household income, all household incomes added together and divided by the total number of households.

On the other hand, the median household income represents the income level earned by a household within a designated demographic area, where half of the households earn more, and half earn less.

Using the median income is considered a more precise measure of the financial status of Americans compared to the average household income. This is because the latter can be distorted by a few individuals with exceptionally high incomes, such as multi-millionaires or even billionaires, which would significantly inflate the average.

It's important to note that when calculating the median household income in the United States, the Census Bureau includes households with no income. However, other income analyses, particularly those focusing on various average income statistics, only consider households with positive income amounts.

When calculating the median and average household income for all households in the United States, the average figure will consistently surpass the median due to the influence of a small number of households with exceptionally high incomes.

Let's use a hypothetical example to show how household income works. Let's say Brian earns $60,000 annually from his job as a schoolteacher. His spouse Allison earns $80,000 as a data analyst. Together, their family income is $140,000. Brian and Allison have son, Jamie, who lives with them. Jamie is 17 years old and makes $20,000 annually as a cashier. Assuming these figures are their only income, their total household income, as defined by the Census Bureau, is $160,000.

Income is defined as the monetary compensation received by an individual through employment or the sale of goods and services. For the majority of individuals, it pertains to personal earnings derived from employment. This may take the form of a fixed salary, hourly wages, gratuities, incentives, or vacation remuneration. It is but one component of household income, which is defined by the Census Bureau as the total earnings of all individuals aged 15 and above residing under the same roof. This metric not only serves as an indicator of individuals' living standards, but also has utility in other contexts, such as risk assessment by financial institutions. The calculation of household income involves aggregating the gross income of each member.