Definition
Your effective tax rate is your total federal income tax liability divided by your total gross income — your true average tax rate across all earnings. Because of the progressive bracket structure, your effective rate is always lower than your marginal rate.
For example, a single filer with $70,000 gross income might owe about $9,500 in federal income tax. $9,500 ÷ $70,000 = 13.6% effective rate — even though they're in the 22% marginal bracket.
Effective rate is the most accurate measure of your real tax burden. It's also the rate used when comparing taxes across countries or income levels.
How this affects your W-4
The calculator displays your effective rate alongside your marginal rate in the results. If your effective rate is lower than expected, your deductions and credits are working as intended.
When planning withholding adjustments, use your marginal rate to estimate the impact of additional income, but use your effective rate to understand your overall tax burden.
See how effective tax rate affects your withholding
Use the free W-4 calculator to calculate your exact withholding with your specific situation.
Open the W-4 Calculator →Related terms
Marginal Tax Rate
The tax rate that applies to the last (highest) dollar of your income — your 'tax bracket.'
Tax Bracket
An income range taxed at a specific rate — income in each bracket is only taxed at that bracket's rate.
Taxable Income
The portion of your income subject to federal income tax after all deductions are applied.