After-tax income – Financial Terms

After-tax income, sometimes called post-tax dollars, is the amount of income you have left after federal income taxes (plus state and local income taxes, if they apply) have been withheld. If you contribute to a individual retirement account (IRA), purchase an annuity, or invest in a taxable account, you are using after-tax income. In contrast, if you contribute money to an employer sponsored retirement plan or flexible spending account, you are investing pretax income.