## What does turbotax effective tax rate mean

The effective tax rate on this individual was 13.7%, the amount of his income he actually paid due to the fact that each tier of his income was taxed at a different rate. How Taxable Income Works

TurboTax reports an ‘Effective Tax Rate’ of 14.61% – A CONSIDERABLE UNDERSTATEMENT! Although I believe its method wrong, at the very least, it should define what it means by ‘effective tax rate’ and explain its methodology. I use TurboTax. It says my Federal "Effective Tax Rate" is 27.83%, but when I divide my total tax by my AGI I get 33.3%. When that happens, the highest tax rate that applies to your income is your marginal tax rate. And the higher your income, the higher your marginal tax rate will likely be — anywhere from 10% to 37%. But if your marginal tax rate is 37%, that doesn’t mean you’re actually paying 37% of all your income to Uncle Sam. Pays for itself (TurboTax Self-Employed): Estimates based on deductible business expenses calculated at the self-employment tax income rate (15.3%) for tax year 2019. Actual results will vary based on your tax situation. Pays for itself (TurboTax Self-Employed): Estimates based on deductible business expenses calculated at the self-employment tax income rate (15.3%) for tax year 2019. Actual results will vary based on your tax situation.

## The effective tax rate is the average rate at which an individual is taxed on earned income, or the average rate at which a corporation is taxed on pre-tax profits.

Pays for itself (TurboTax Self-Employed): Estimates based on deductible business expenses calculated at the self-employment tax income rate (15.3%) for tax year 2019. Actual results will vary based on your tax situation. The effective tax rate on this individual was 13.7%, the amount of his income he actually paid due to the fact that each tier of his income was taxed at a different rate. How Taxable Income Works The effective tax rate is the average rate at which an individual is taxed on earned income, or the average rate at which a corporation is taxed on pre-tax profits. Definition: Effective tax rate is the average percentage that companies and individuals pay in taxes on their taxable income. It’s typically calculated by dividing total taxes paid by the total taxable income.