Taxes
Effective tax rate
The average rate across all income, always at or below the marginal rate.
The Formula
Effective = tax / income
The average rate across all income, always at or below the marginal rate.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| T | Total tax | currency | Tax across all brackets. |
| I | Total income | currency | Taxable income for the year. |
What Each Symbol Means
Tcurrency
Total tax
Tax across all brackets.
Icurrency
Total income
Taxable income for the year.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate tax bracket 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 Tax Bracket, filed under Finance. Every number the guide produces comes from substituting into this one line.