aftertax

Aftertax, or after-tax, refers to the amount of money remaining after all applicable taxes have been paid. The term can describe income, earnings, investment returns, or cash flows that have been reduced by taxes. It is often contrasted with pretax or pre-tax amounts, which are calculated before tax obligations.

In personal finance, after-tax income is the take-home pay that remains after income taxes, payroll taxes, and other withholdings. It is used for budgeting, saving, and consumption. The calculation depends on marginal tax brackets, allowable deductions, credits, and other tax rules. For example, a gross salary of 50,000 with 12,000 in taxes yields an after-tax income of 38,000.

In investing, after-tax return reflects the net result after taxes on investment income and capital gains. Tax treatment varies by asset type and account. Qualified dividends and long-term capital gains may be taxed at lower rates than ordinary income. In tax-advantaged accounts, such as traditional retirement accounts, taxes may be deferred until withdrawal; Roth accounts involve after-tax contributions with tax-free withdrawals. The after-tax performance of an investment can differ significantly from its pretax performance, influencing decisions about asset location and trading strategy.

In corporate finance, after-tax cash flow and after-tax profitability measures are used to assess performance. Calculations typically apply the corporate tax rate to pretax figures to obtain net income or after-tax cash flow. The concept helps compare options and assess the real economic impact of decisions, accounting for the bite of taxes.

Overall, aftertax figures are essential for personal planning, investment analysis, and corporate evaluation, reflecting the real, spendable amount after tax obligations.