when analyzing or forecasting personal or corporate cash flows it is essential to use an estimated after tax net cash projection this estimate is a more appropriate measure than pretax income or gross income because after tax cash flows are what the entity has available for consumption 
calculating after tax income for businessescomputing after tax income for businesses is relatively the same as for individuals however instead of determining gross income enterprises begin by defining total revenues business expenses as recorded on the income statement are subtracted from total revenues producing the firm s income finally any other relevant deductions are subtracted to arrive at taxable income the difference between the total revenues and the business expenses and deductions is the taxable income on which taxes will be due the difference between the business s income and the income tax due is the after tax income after tax and pretax retirement contributionsthe terms after tax and pretax income often refer to retirement contributions or other benefits for example if someone makes pretax contributions to a retirement account those contributions are subtracted from their gross pay 2 after deductions are made to the gross salary amount the employer will calculate payroll taxes medicare contributions and social security payments are calculated on the difference after these deductions are taken from the gross salary amount however if the employee makes after tax contributions to a retirement account the employer applies taxes to the employee s gross pay and then subtracts the retirement contributions from that amount 2