It depends. Your effective tax rate is based on how much income tax liability you have on your reportable income. Last year, you had a tax liability of zero, and undoubtedly had less income than what you had this past year. This past year, you did have a tax liability. A 5.35% effective tax rate means that if you are reporting 20,000 (this is an example), your tax liability is $1070, or 5.35% of your reported income. (To know the exact amount, you will have to divide your tax, which is located on line 10 of Form 1040EZ or line 28 of Form 1040A, depending on which form you file, with your AGI, line 4 of 1040EZ or line 21 of Form 1040A). That percentage should be 5.35%
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