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Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Ordinary Income


Ordinary income refers to the tax rate you get charged for your earnings and for investment gains on investments you've held for less than a year.

The tax rate for ordinary income is way higher (like almost twice as much) than it is for capital gains (profits you've gotten on investments you've held for a short period of time).

Moral of the story: Hold on to your investments for more than a year, or the government will consider it ordinary income and take more of it from you.