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Simple English definitions for legal terms
pretax earnings
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A quick definition of pretax earnings:
Pretax earnings refer to the amount of money a company earns before paying income taxes. This includes revenue gained from labor or services, investments, or assets. It is important to note that pretax earnings do not take into account any taxes that the company may owe, so it is not the same as the company's net income.
A more thorough explanation:
Pretax earnings refer to the amount of income earned by an individual or a company before taxes are deducted. This includes revenue gained from labor or services, investment of capital, or assets.
- If a company earns $100,000 in revenue and has $20,000 in expenses, their pretax earnings would be $80,000.
- If an individual earns a salary of $50,000 per year, their pretax earnings would also be $50,000.
These examples illustrate how pretax earnings are calculated by subtracting expenses from revenue or income. It is important to note that taxes will be deducted from these earnings, which will result in a lower net income or take-home pay.