The effective tax rate is the tax divided by the income, but there are other factors that go into the calculation. I will list out the comprehensive formula for you. Although most items will likely not apply to your situation, I cannot see your return and do not know your tax situation. Please look at the calculation below and determine what might apply to you for this year that did not apply in the previous year.
Income Calculation
Income = Adjusted Gross Income (AGI)
• Plus: Taxable amounts from lump-sum distributions (if special averaging or capital gain treatment is elected)
• Plus: Net unrealized appreciation (NUA) in employer’s securities (if elected to include in the tax calculation)
Tax Calculation
Tax Liability = Base Tax (regular tax + alternative minimum tax)
• Smaller of nonrefundable credits or base tax
Less: Refundable credits, including:
• Fuel Tax Credit
• Child Tax Credit (refundable portion)
• Refundable American Opportunity Credit
• Net Premium Tax Credit
• Health Coverage Tax Credit
• Earned Income Tax Credit (EITC), and other refundable credits.
Effective Tax Rate Formula
• Effective Tax Rate =Tax Liability (after subtracting credits) \ Income (AGI + additions)
Special Cases
• If refundable credits exceed the tax liability, resulting in a negative tax liability, the effective tax rate is negative.
• If income is zero or negative, the effective tax rate is set to zero. This formula ensures all adjustments to income, tax, and credits are factored in, reflecting the full impact of both refundable and nonrefundable credits on the taxpayer’s liability.
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