Pretax Meaning: Definition, Examples, and Translations
๐ฐ
pretax
[priหหtรฆks ]
Definition
financial context
The term 'pretax' refers to an amount of money or income that has not yet been subjected to taxation. It is often used in financial contexts to denote income, earnings, or contributions made before taxes are deducted. For example, a pretax salary is the total earnings of an individual before any taxes are taken out. This concept is important for individuals and businesses when calculating net income or for tax planning purposes.
Synonyms
before tax, pre-tax, tax-exempt.
Examples of usage
- I prefer to save my pretax income into a retirement account.
- The company's pretax profits were higher than expected.
- Employees can contribute to a pretax health plan, reducing their taxable income.
Translations
To see the translation, please select a language from the options available.
Origin of 'pretax'
The word 'pretax' is formed by the prefix 'pre-' which originates from Latin meaning 'before', and 'tax', which comes from the Latin 'taxare' meaning 'to assess'. The amalgamation of these terms created 'pretax', indicating a financial term that is associated with amounts before they are taxed. The concept has gained prominence in finance and accounting, especially in discussions of income, investments, and retirement savings, as understanding pretax advantages can significantly affect an individual's or company's fiscal strategy. As tax policies evolved, the use of pretax in financial literacy has become increasingly important, prompting discussions on pretax contributions and deductions.