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Categories: General Tax Terms

After-Tax Income refers to the amount of income that remains after all federal, state, and local taxes have been deducted from an individual’s or entity’s gross income. It is essentially the net income available to be spent or saved.

This figure is crucial for financial planning and budgeting, as it reflects the actual earnings that can be utilized for personal expenses, investments, or savings. For example, if an individual earns a gross income of $80,000 and pays $20,000 in taxes, their After-Tax Income would be $60,000. This metric is often used by taxpayers to assess their financial health and make informed decisions regarding expenditures and investments.

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