Pretax Book Income

Definition: Pretax Book Income (also called Income Before Income Taxes or Pretax Income) is income measured under GAAP before deducting income tax expense. It …

Pretax Book Income (also called Income Before Income Taxes or Pretax Income) is income measured under GAAP before deducting income tax expense. It is the line on the income statement immediately above the income tax provision. Pretax Book Income differs from Taxable Income (the basis for current income tax) due to permanent differences (e.g., tax-exempt municipal bond interest) and temporary differences (e.g., depreciation timing). Pretax Book Income is the denominator of the Effective Tax Rate.