Which type of income includes wages and salaries?

Wages and salaries fall under the category of earned income, which consists of money received from work or active involvement in a business. This type of income is generated through labor, whether as an employee or as a self-employed individual. Earned income is subject to income tax and may also be subject to Social Security and Medicare taxes.

In contrast, passive income refers to earnings derived from rental properties, limited partnerships, or any enterprise in which a person is not actively involved. Unearned income includes revenue from sources like interest, dividends, and capital gains, which are not tied directly to working for a paycheck. Investment income is generated from investments and capital assets rather than from direct employment. Thus, earned income distinctly represents the compensation received for personal labor, making it the correct choice for this question.