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Effective Tax Rate

Your effective tax rate is calculated by dividing your total tax owed by your total taxable income. Because the U.S. uses progressive brackets, your effective rate is always lower than your marginal rate. This is the number that matters for budgeting and comparing compensation packages.

Example

A single filer with $75,000 taxable income pays $11,414 in federal tax. Effective rate: $11,414 ÷ $75,000 = 15.22%.

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Income Tax Brackets

The U.S. federal income tax uses seven progressive brackets with rates from 10% to 37%. Each bracket rate only applies to the income within that range — not to your entire income.