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Why did my blended tax rate increase?

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Expert Alumni

Why did my blended tax rate increase?

The Blended tax rate is a determined by the your income tax divided by your adjusted gross income.  So you could effectively have the same or about the same amount of income year over year and have a higher blended rate tax rate due to the make up of your income.  If you have capital gains, they are taxed at a different rate then ordinary income.  If you have self employment income, there is additional self employment tax associated with that.  If you had a dependent that turned 17 or maybe did not pay as much child care, losing those tax credits will increase your tax amount and thus the effective or blended tax rate.


I would recommend reviewing your 2019 and 2020 returns side by side and see if:

  • Were there any changes in the composition of your total income.  Did the types of income change.  Did your total income go down or up.
  • Review your tax credits.  Was the amount less for 2020.
  • Review you tax amount.  If you earn more income, you will be pushed up into higher marginal tax brackets which will result in a higher blended rate.

Click Here for some more information on effective tax rates

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