DEFINITION of 'Pretax Rate Of Return'
The rate of return on an investment that does not take the taxes the investor must pay on this return. Because individuals' tax situations differ and different investments attract varying levels of taxation, the pretax rate of return is the measure most commonly cited for investments in the financial world.
BREAKING DOWN 'Pretax Rate Of Return'
Since dividends on stocks may be taxed at a different level from interest income or capital gains, for example, the pretax rate of return enables comparisons to be made across different asset classes. However, it is the aftertax rate return that is most important to investors.
For example, assuming a capital gains tax rate of 15%, a stock that provides a 5% pretax rate of return would have an aftertax rate of return of 4.25%. However, suppose that a municipal bond that is taxexempt and has a pretax return of 4.25% and would therefore also have the same aftertax rate of return. In this case, an investor may choose the municipal bond because of its greater degree of safety and the fact that its aftertax return is the same as that of the more volatile stock, despite the latter having a higher pretax rate of return.

AfterTax Return
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A company's earnings after all operating expenses, including ... 
AfterTax Real Rate Of Return
The actual financial benefit of an investment after accounting ... 
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A company's earnings before tax as a percentage of total sales ... 
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The gain or loss of a security in a particular period. The return ... 
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A profitability measure that indicates how well a company uses ...

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What's a Real Rate of Return?
A real rate of return is an annual percentage investment return thatâ€™s adjusted for inflation, taxes or other factors. 
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The expected return is a tool used to determine whether or not an investment has a positive or negative average net outcome. 
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Taxequivalent yield is the pretax yield a taxable bond must possess for its yield to equal that of a taxfree municipal bond. 
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What's a Return of Capital?
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A tax return is the form or forms used to file income taxes with the IRS. 
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Understanding Total Returns
Total return measures the rate of return earned from an investment over a period of time. 
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What is a Return?
A return is the gain or loss a security generates over a period of time. 
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