Why does my Turbo Tax Effective Tax Rate not equal Total Tax income divided by Taxable income?

[75Brewin]

Effective Tax Rate does not equal Total Tax / Taxable Income

[DianeW777]

It depends. There are several variables being used to calculate the 'effective tax rate'. Income, deductions, credits, investments and more. The article below will explain additional details about this tax rate. The IRS tax system is a graduated system which means it starts at zero and climbs based on your taxable income amount.

• Is it Possible to Lower My Effective Tax Rate? What Are My Options?

Example: If there are capital gains on a tax return, then they can be taxed at a completely different rate than your other income.

[SteamTrain]

@75Brewin 

Yeah, usually "Effective" does not use "Taxable Income" as the divisor...but instead uses AGI  (i.e. total income).  (plus/minus a few special credits/deductions)

Then it gets way out of whack for those with Self-Employment income who have to pay SE taxes of ~15% before adding in the regular tax.

_______________________