The term budget surplus refers to a situation that occurs when income exceeds expenditures. The term is often used to describe a corporation or government's financial state, unlike individuals who have savings instead of budget surpluses. A surplus indicates that a government's finances are being effectively managed.

Budget surplus occurs when government’s tax revenue is more than government spending. In other words, in a budget surplus, a government has more money coming in than going out, which results in a positive balance at the end of a fiscal year. It also means that the government income is greater than its spending.