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How to Calculate Effective Income Tax Rates


Calculate your total income for the year before taxes. Be sure to include all of your income, including tax-free interest or other tax-advantaged income.


Consult your tax returns to determine the amount of income tax paid.


Divide the amount of tax paid by the amount of income you have to calculate your effective income tax rate, expressed as a decimal. For example, if you have $100,000 in income and paid $20,000 in taxes, you would divide $20,000 by $100,000 to find your effective income tax rate expressed as a decimal to be 0.20.


Multiply your effective tax rate expressed as a decimal by 100 to convert it to a percentage. In this example, you would multiply 100 by 0.20 to find the effective tax rate to be 20 percent.

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