The exclusion of up to $5,000 for death benefits no longer applies. It had applied only for employees who died before August 21, 1996. Only a death gratuity paid to a survivor of a member of the Armed Forces continues to be excludable from gross income.
Net income after claiming all deductions from gross income and adjusted gross income, such as IRA deductions, itemized deductions, or the standard deduction, and personal exemptions.