what is after tax income 
after tax income is the net income after deducting all federal state and withholding taxes after tax income also called income after taxes and the net of tax amount represents the amount of disposable income that a consumer or firm has available to spend understanding after tax incomemost individual tax filers use some version of the irs form 1040 to calculate their taxable income income tax due and after tax income 1 to calculate after tax income the deductions are subtracted from gross income the difference is the taxable income on which income taxes are due after tax income is the difference between gross income and the income tax due consider the following example abi sample earns 30 000 and claims 10 000 in deductions resulting in a taxable income of 20 000 their federal income tax rate is 15 making the income tax due 3 000 the after tax income is 27 000 or the difference between gross earnings and income tax 30 000 3 000 27 000 individuals can also account for state and local taxes when calculating after tax income when doing this sales tax and property taxes are also excluded from gross income continuing with the above example abi sample pays 1 000 in state income tax and 500 in municipal income tax resulting in an after tax income of 25 500 27 000 1500 25 500 