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Effective tax rate is total tax paid divided by total income, showing the true percentage of income paid as tax. It differs from marginal rate which applies only to the next dollar earned.

Formule

Stapsgewijze handleiding

1. 1Calculate tax owed based on tax brackets and income
2. 2Divide total tax by total income
3. 3Result is the actual average percentage rate

Uitgewerkte voorbeelden

Veelgemaakte fouten om te vermijden

• ✕Confusing effective with marginal rate
• ✕Not accounting for all income sources