After-tax income
After-tax income is the income that remains after taxes have been taken out. For the HCTC, individuals must pay more than 50% of their health premium costs for certain employer-sponsored plans with after-tax income. Any part of health premium costs for certain employer-sponsored plans that are paid with before-tax income – or pre-tax dollars – cannot be counted in the calculations to determine one’s HCTC eligibility. The rationale for this rule about after-tax income is that an individual cannot receive a double tax benefit; that is, an individual cannot receive both pre-tax dollars for health premium costs and then also the health coverage tax credit for those same health premium costs.