Effective Tax Rate
The average rate you actually pay across all your income, once every bracket is blended together.
Effective tax rate divides total tax paid by total income — the real-world average, blending every bracket your income passed through. It's almost always lower than your marginal rate, since only your top slice of income is taxed at the highest bracket you reach.
Worked Example
Someone whose marginal rate is 24% might have an effective rate closer to 15%, because only a portion of their income was actually taxed at 24% — the rest was taxed at the lower rates below it.
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