Tax
Effective rate
The average rate paid across all income.
The Formula
Effective rate = total tax / taxable income x 100
The average rate paid across all income.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| T | Total tax | currency | Tax across all brackets. |
| I | Taxable income | currency | Income after deductions. |
What Each Symbol Means
Tcurrency
Total tax
Tax across all brackets.
Icurrency
Taxable income
Income after deductions.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate income tax page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Income Tax, filed under Finance. Every number the guide produces comes from substituting into this one line.