Agricultural income refers to the profits and losses that are incurred through the operation of a farm or agricultural business. In the United States agricultural policy, several measures are used to gauge farm income over a given period of time:

• Gross cash income: the sum of all receipts from the sale of crops, livestock, and farm-related goods and services, as well as all forms of direct payments from the government.
• Gross farm income: the same as gross cash income with the addition of nonmoney income, such as the value of home consumption of self-produced food and the imputed gross rental value of farm dwellings.
• Net cash income: gross cash income less all cash expenses such as for feed, seed, fertilizer, property taxes, interest on debt, wages to hired labor, contract labor, and rent to nonoperator landlords.
• Net farm income: gross farm income less cash expenses and noncash expenses, such as capital consumption, perquisites to hired labor, and farm household expenses. It is a longer-term measure of the ability of the farm to survive as a viable income-earning business.

In India, agricultural income refers to income earned or revenue derived from sources that include farming land, buildings on or identified with agricultural land, and commercial produce from a horticultural land. Agricultural income is defined under section 2(1A) of the Income Tax Act, 1961, and is exempt from taxation under Section 10(1) of the ITA, 1961.

Farmers benefit from both general tax provisions available to all taxpayers and from provisions specifically targeted to farmers. In general, income from farming is taxed more favorably than income from many other businesses. Some of the specific provisions that are responsible for this treatment include the current deductibility of certain capital costs, capital gains treatment of proceeds from the sale of farm assets, cash accounting, and farm income averaging.