Financial glossary
Effective Tax Rate
In plain English
Total estimated tax divided by the chosen income measure, showing an average percentage rather than the rate on the next dollar.
Effective tax rate
An effective tax rate is total tax divided by a selected income measure. It expresses an average percentage, unlike a marginal rate, which applies to the next dollar of taxable income.
The denominator must be stated. Federal income tax divided by gross income is different from total federal, payroll, state, and local taxes divided by adjusted gross income. Two sources can report different effective rates for the same household because they include different taxes or use different income definitions.
Under progressive brackets, an effective federal income-tax rate is normally below the highest marginal bracket because deductions remove income and earlier taxable layers use lower rates.
The federal income tax calculator reports regular federal tax after entered nonrefundable credits divided by gross income. It does not call that percentage a total tax burden.
Related calculators
- 2026 Federal Income Tax CalculatorEstimate 2026 federal income tax using current brackets, filing status, deductions, and credits. See taxable income, marginal rate, and effective rate.
- 2026 Self-Employment Tax CalculatorEstimate 2026 self-employment tax on business profit, including Social Security, Medicare, Additional Medicare tax, and the deductible half.
- 2026 Capital Gains Tax CalculatorEstimate 2026 federal tax on short- and long-term capital gains using ordinary brackets and the 0%, 15%, and 20% long-term thresholds.