effective tax rate calculation

The effective tax rate is the average percentage of your total income that you pay in taxes. To calculate it, you divide your total tax paid by your total income and then multiply by 100. For example, if you earned $50,000 and paid $7,500 in taxes, your effective tax rate is ($7,500 ÷ $50,000) × 100 = 15%. It provides a clear measure of your overall tax burden, reflecting the actual rate you’re paying across all income, rather than just the rates applied to specific income brackets.