What is investment income?

Businesses often have income from investments. On the income statements of publicly traded companies, an item called investment income or losses is commonly listed. This is where the company reports the portion of its net income obtained through investments made with surplus cash instead of being earned in its usual line of business.

What types of investments generate investment income?

Options, stocks, and bonds can also generate investment income. Whether through regular interest or dividend payments or by selling a security at a higher price than was paid. Any amount received above the original cost of the investment qualifies as investment income.

How is investment income taxed?

Investment income is taxed at a different rate than earned income. The profits from the sale of gold coins or fine wine could be considered investment income. If you have a savings account, the interest you earn on it is considered investment income. Investment income refers solely to the financial gains above the original cost of the investment.