How to Calculate Net Increase

Image Credit: utah778/iStock/GettyImages

Whether you're looking at your personal finances, operating a small business or running some numbers for your employer, you will often want to find the net increase in your income, investment or business operation. Understanding the difference between a gross and net amount will help you start making your calculations and finding your numbers.


Net vs. Gross

The total amount of value before any deductions is the gross amount. The total amount of value after fees, commissions, taxes or other deductions is the net amount. For example, if you earn ​$48,000​ per year in salary, that's your gross salary amount; your monthly gross pay is ​$4,000​. After you deduct your payroll taxes, voluntary benefits (like vision or dental insurance) and a retirement account contribution (like a 401(k) match), that's your net amount. So, your gross monthly pay from your employer might be ​$4,000​, but your net take-home pay might be ​$3,200​.


Video of the Day

Read More​: How to Calculate Net Gain or Loss

In an Investment Portfolio

Just because your stocks or other investments have increased in value doesn't mean you get to put all those gains in your pocket. You might have to pay fees, commissions and taxes. To find out your gross increase, take the beginning value of your portfolio during the period you want to review. If you're calculating net increase for a tax year, you'd take your value on January 1. Next, subtract this amount from your portfolio value on your period end date, such as December 31.


For example, if you started the year with a portfolio worth ​$43,000​ and ended the year with a value of ​$52,000​, subtract ​$43,000​ from ​$52,000​. You saw a gross increase in value of ​$9,000​, or approximately 21 percent. To get your net increase, subtract all of your fees, commissions and taxes. If your stock paid a dividend, this amount won't be included in the above calculation. Figure that in separately, or add the dividend to your ending date value and run your numbers.

Read More​: Definition of Net Pay vs. Gross Pay


In Your Income

If you get a raise next year, you'll want to know how it translates into spendable cash each month. If you earned ​$50,000​ last year and got a ​$5,000​ raise, your gross salary increase will be ​$5,000​. However, you'll have to pay taxes on that ​$5,000​. If you're taking advantage of a 401(k) match, you'll have to deduct that from your raise. Make sure to look at the personal income tax brackets for your state and federal taxes.


If you're on the cusp of the next tax bracket and get a small raise, you'll be paying a higher percentage of your income in taxes this year.

Read More​: How to Measure Stock Performance

In an Investment

If you want to know the net increase in a single investment, such as a stock, piece of real estate or other asset, use the same steps you use for calculating the net increase in a portfolio value, described in the first section above. You'll look at your investment value at the beginning and end of your desired period, subtract any fees or taxes and then run your numbers.


In Business Operations

Businesses want to know their net improvement in a variety of areas, including cash flow, debt, inventory or investment income. The business might want to know the net increase in cash and cash equivalents. The steps are similar to each other, which include subtracting the gross beginning value from the gross ending value. You then subtract any other fees, commissions, taxes or other expenses to get your net amount.

If you want to know your net increase in inventory, you must factor in damaged goods that couldn't be sold and returned items that had to be replaced. You can look at your inventory by the number of units, or look at the value of the inventory, which might have cost you more or less to make later in the year, or which might have increased or decreased in its sales value.