Enhanced Effective Tax Rate Calculator
Quickly calculate your effective tax rate-corporate or individual-factoring in income, tax expenses, credits, and deductions. Enter your state & local tax as a percentage of income.
About Effective Tax Rate
The effective tax rate measures the average rate at which taxable income is taxed, accounting for deductions, credits, and different tax components. It is calculated as:
Effective Tax Rate (%) = (Total Tax Paid ? Taxable Income) ? 100
This rate gives a realistic view of tax burden, reflecting the impact of R&D credits, state and local taxes, tax-loss carryforwards, and other adjustments on the true tax cost.
Corporate Effective Tax Rate Details
- Statutory vs. Effective: While the statutory corporate rate might be 21%, credits and deductions often lower the effective rate.
- Key Factors: R&D credits, state & local taxes (entered as % of income), and carryforwards can significantly reduce taxable income or tax expense.
- Use Cases: Companies benchmark effective rates to assess tax planning efficiency and compare across peers.
Individual Effective Tax Rate Details
- Ordinary vs. Preferential Income: Ordinary wages are taxed at marginal rates; capital gains enjoy lower preferential rates.
- Adjustments: Deductions (standard or itemized) and credits (education, energy) reduce taxable income or tax liability.
- State & Local Impact: State income taxes (entered as % of taxable income) add to federal burden, affecting overall effective rate.