# Effective Tax Rate

*Taxes — Finicade finance glossary*

Your effective tax rate is total tax divided by total income — the average share you actually paid. It's always lower than your marginal rate under a progressive system, often dramatically: a US filer in the 24% bracket typically has an effective rate near 14%. Use effective rate to understand your burden and marginal rate to make decisions; confusing the two is how people conclude that earning more isn't worth it.

**Formula:** `Effective tax rate = Total tax ÷ Total income`

**Also known as:** average tax rate, overall tax rate

**Related terms:** [Marginal Tax Rate](https://finicade.com/glossary/marginal-tax-rate), [Tax Bracket](https://finicade.com/glossary/tax-bracket), [Taxable Income](https://finicade.com/glossary/taxable-income), [Progressive Tax](https://finicade.com/glossary/progressive-tax), [Corporate Tax Rate](https://finicade.com/glossary/corporate-tax-rate)

Source: https://finicade.com/glossary/effective-tax-rate