The Blended Tax rate is:
- Tax liability (Including SE tax, capital gain and special taxes),
- Divided by
- Taxable income (Total income minus deductions, but before credits).
- (All line numbers are on form 1040).
The Effective Tax rate is your:
- Total income (line 9)
- Deductions (Line 12) This is Itemized or Standard
- Taxable Income (Line 9 – Line 12)
- Blended Tax Rate (Tax Liability [below] / Taxable Income [above])
- Tax Liability (Line 16 + Line 23)
- Taxes Paid (line 25d)
Credits (Line 21)
Total Tax Paid (Line 21 + Line 25d)
Refund/Due (Line 34 or Line 37)
Effective tax rate doesn't consider SE tax and any penalties, and blended tax rate does. Blended tax rate is a confusing and unnecessary term to be using in TT, and gets everybody all upset.
You can compute it yourself with a calculator.
Effective tax rate is something Turbo Tax uses to help you see where you stand; to see which W-2 may be deficient in withholding the correct amount of Federal tax, etc.
It should be the tax divided by the total income, not the AGI. It is a number without any real value other than just to let you know when you earn $1, about x% is taxed.
For more effective information see:
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