After-tax.

Income you have already paid income tax on, like the dollars that go into a Roth account, so qualified withdrawals later come out tax-free.

Reviewed by Joseph Citizen, Founder · Last reviewed July 12, 2026

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After-tax

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In plain English

After-tax refers to money that has already been taxed as income before you put it to work. It is the opposite of pre-tax. A Roth IRA or Roth 401(k) is funded with after-tax dollars: you get no deduction now, but the money grows and, if you follow the rules, comes out completely tax-free in retirement. Knowing whether a dollar is pre-tax or after-tax tells you when the tax gets paid, which is the whole difference between a Roth and a traditional account.

Most useful ages

22 to 70

01Why it matters

Whether you contribute pre-tax or after-tax decides when you pay the tax, which is the core choice between a traditional and a Roth account.

02The math, step by step

You earn 100 dollars, pay 22 in tax, and put the remaining 78 into a Roth IRA. That 78 is after-tax money; in retirement you withdraw it and its growth tax-free.

03What this is NOT

Do not confuse with Pre-tax

After-tax is NOT pre-tax. Pre-tax money is set aside before income tax and taxed later when you withdraw; after-tax money is taxed now and, in a Roth, comes out untaxed.

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