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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.

Формула

Водич корак по корак

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

Worked Examples

Common Mistakes to Avoid

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