Effective Tax Rate
Your total tax divided by your total income — the average rate you actually pay.
What does effective tax rate mean?
Because lower brackets tax part of your income at lower rates, your effective rate is always below your marginal rate. It’s the truest measure of your overall tax burden.
Put it to use
Marginal Tax Rate Calculator (Tax Year 2017) Use this calculator to determine your marginal and effective tax rates for tax year 2017. This calculator sorts through the tax brackets and filing options to calculate your true tax liability. 1040 Tax Calculator (Tax Year 2017) Use this 1040 tax calculator to help estimate your tax bill using the 2017 tax year's rates and rules.
Related terms
Effective Tax Rate — frequently asked
How do I calculate my effective tax rate?
Divide your total tax by your total (or taxable) income and multiply by 100. If you owe $9,000 on $75,000 of income, your effective rate is 12% — well below whatever top bracket you reach.
Why is my effective rate lower than my tax bracket?
Because the U.S. system is progressive: your first dollars are taxed at low rates and only the top slice hits your highest bracket. Deductions further reduce taxable income, pulling the effective rate down.