Effective Tax Rate

Effective tax rate, abbreviated as ETR, is the tax you actually pay versus the income you earn.

 

Corporation effective tax rate Formula

\(\large{ ETR = \frac{ T }{ EBT } }\)

Symbol

\(\large{ ETR }\) = effective tax rate

\(\large{ EBT }\) = earnings before taxes

\(\large{ T }\) = total tax

 

Individual effective tax rate Formula

\(\large{ ETR =  \frac{ T }{ TI } }\)

Symbol

\(\large{ ETR }\) = effective tax rate

\(\large{ TI }\) = taxable income

\(\large{ T }\) = total tax