minimalism tip

Be aware of the three types of income and how you pay taxes on each differently

There are three types of income, and they’re not treated equally. Knowing this can help you better understand your taxes and which income you to make more of. The three types of income are: 1) earned income (like what you make from your day-job), 2) portfolio income (the income you make from the stock market when your investments go up), and 3) passive income (the income you make from assets you own, while not actively working (e.g.: rental income or business income). Each type of income is taxed differently, too. You pay a higher percentage in taxes from active income than from portfolio income, typically. Knowing the different types of income can help you better understand how your money works and how you can save on taxes, too.