Pretax Income

The term can indicate the funds (or cash) withheld before tax deduction. It can be applied for personal or business-related calculations.  

In personal tax, gross pay is used to indicate the same. In a business environment, it can be used to get the profitability and liquidity analysis where earnings before tax (EBT) denote the amount the firm retains after deducting the operating cost. 

It is calculated as Net Income + Taxes

It differs from the amount paid as tax in the financial tax year which is determined through IRS regulatory guidelines.

Subtraction of taxes from EBT provides the remaining income that fluctuates depending on the changes in government policies.

Companies use the term carrybacks for conditions when the net operating loss in a year is applied against net income in the two preceding years.

The term helps the investors to perceive the company’s financial performance and compare it with other firms to make an investment decision.