Total tax divided by total income — what you actually pay overall.
Because brackets are marginal, your effective rate is always below your marginal rate. It is the number that belongs in planning spreadsheets.
Example: $14,000 tax on $95,000 income = 14.7% effective, despite a 22% bracket.
FAQ
What is Effective Tax Rate in simple terms?
Because brackets are marginal, your effective rate is always below your marginal rate. It is the number that belongs in planning spreadsheets.