Effective tax rate, abbreviated as ETR, is the tax you actually pay versus the income you earn.
Corporation Effective Tax Rate Formula |
| \( ETR \;=\; \dfrac{ T }{ EBT } \) |
| Symbol |
| \( ETR \) = effective tax rate |
| \( EBT \) = earnings before taxes |
| \( T \) = total tax |
Individual Effective Tax Rate Formula |
| \( ETR \;=\; \dfrac{ T }{ TI } \) |
| Symbol |
| \( ETR \) = effective tax rate |
| \( TI \) = taxable income |
| \( T \) = total tax |