Net of Tax
What is Net of Tax?
Net of tax simply means that the number in question is the amount left over after taxes.
How Does Net of Tax Work?
For example, let's say you win $1,000,000 on a game show. After the show, a nice person backstage will also give you an IRS Form 1099 so that you can pay state and local taxes on the winnings. Depending on where you live and where the show tapes, you not only have to pay 40% in federal taxes, but you also must pay 5% to the state in which you won the money and 5% to the state in which you live. Your winnings net of tax would equal:
$1,000,000 - $400,000 - $50,000 - $50,000 = $500,000
Why Does Net of Tax Matter?
In business and in life, it is always important to factor in the effects of taxes. They considerably reduce much of the cash flows available to businesses and individuals, and their existence has a significant impact on investment decisions. Thus, determining cash flows net of tax is a key factor in financial analysis.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.