Median income is calculated by identifying the middle value in a set of incomes as long as the set of incomes is in ascending order, according to Concept Stew. With an even number, the median is calculated by averaging the two numbers in the middle of the set.

Median income is a better indicator of central tendency than the mean if the distribution of data is skewed, notes Concept Stew. A skewed distribution of data occurs if there are a disproportionate number of values at the high end or the low end of the distribution; these values are misleading when the mean is calculated.