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pretax income

   Also found in: Acronyms 0.03 sec.
pretax income
Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. Also called earnings before taxes, pretax.

Pretax income. Pretax income, sometimes described as pretax dollars, is your gross income before income taxes are withheld.

Any contributions you make to a salary reduction retirement plan, such as a traditional 401(k) or 403(b) plan, or to a flexible spending account comes out of your pretax income.

The contribution reduces your current income and the amount you owe in current income taxes.


pretax income

Income from an investment before income taxes.If there are significant tax advantages to an investment, such as low-income housing credits or bonus depreciation, the after-tax income will sometimes be larger than the pretax income.



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