Passive income is an income received on a regular basis, with little effort required to maintain it. It is closely related to the concept of "unearned income".
The American Internal Revenue Service categorizes income into three broad types, active (earned) income, passive (unearned) income, and portfolio income. It defines passive income as only coming from two sources: rental activity or "trade or business activities in which you do not materially participate." Other financial and government institutions also recognize it as an income obtained as a result of capital growth or in relation to negative gearing. Passive income is usually taxable.
Some examples of passive income are: