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Definition

Effective Tax Rate

Total tax paid divided by total income — your true average tax rate, usually well below your marginal bracket.

Written by Jere Salmisto·Reviewed by CalcFi Editorial·Last verified: 2026-05-13
TL;DR

Effective Tax Rate is Total tax paid divided by total income — your true average tax rate, usually well below your marginal bracket. Used in tax.

What Is Effective Tax Rate?

Because the U.S. uses a progressive tax system, only the income inside each bracket is taxed at that bracket's rate. The effective rate blends all those brackets into one number, giving a more accurate picture of your tax burden than the marginal rate alone.

Related Terms

Marginal Tax Rate
The tax rate applied to your next dollar of income in the progressive tax system.
Tax Bracket
A range of income taxed at a specific marginal rate in the progressive tax system.

Related Calculators

Marginal vs Effective Tax Rate Calculator→
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