What Is an Effective Tax Rate?

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Your effective tax rate is the percentage of your overall taxable income that you actually pay in taxes. “Effective” is a tax way of saying “average,” and this rate is usually considerably less than your marginal tax rate, which is hinged to your tax bracket.

You’d be in the 22% tax bracket if you earn $60,000 in 2020 and you’re single, but you won't pay 22% of your total income in taxes. You’ll pay 22% on just your top dollars—the portion over $40,125 as of the 2020 tax year.

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Original Article Source Credits:   The Balance , https://www.thebalance.com/

Article Written By:  Beverly Bird 

Original Article Posted on:   July 04, 2020

Link to Original Article:  https://www.thebalance.com/how-to-calculate-your-effective-tax-rate-4685263