Black market income is the income generated from economic activities banned by the government or outside government-approved trading channels, according to Investopedia. Income generated from the black market is illegal.
Typically, income earned from a legal activity but not reported to the tax authority is a black market income, just like income earned from selling cocaine or other contraband, according to Investopedia. Participants in black market conduct transaction in secret to evade taxes and government price controls, or to trade in highly controlled goods such as drugs and weapons. Black market income affects the economy because of tax evasion and unrecorded transactions.