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Effective Tax Rate Formula

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The Effective Tax Rate represents the percentage of a corporation’s pre-tax income that was actually paid out in the form of taxes. Check FAQs

ETR = \frac{TEE}{EBT}

ETR - Effective Tax Rate?TEE - Tax Expense?EBT - Pre Tax Income?

Effective Tax Rate Example

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With units

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Here is how the Effective Tax Rate equation looks like with Values.

Here is how the Effective Tax Rate equation looks like with Units.

Here is how the Effective Tax Rate equation looks like.

10 = \frac{10000}{1000}

10 = \frac{10000}{1000}

10 = \frac{10000}{1000}

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Effective Tax Rate Solution

Follow our step by step solution on how to calculate Effective Tax Rate?

FIRST Step Consider the formula

ETR = \frac{TEE}{EBT}

Next Step Substitute values of Variables

∴

ETR = \frac{10000}{1000}

Next Step Prepare to Evaluate

∴

ETR = \frac{10000}{1000}

LAST Step Evaluate

∴

ETR = 10

Effective Tax Rate Formula Elements

Variables

Effective Tax Rate

The Effective Tax Rate represents the percentage of a corporation’s pre-tax income that was actually paid out in the form of taxes.

Symbol: ETR

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Effective Tax Rate

Tax Expense

Tax Expense is defined as the total amount of taxes owed by an individual, corporation, or other entity to a taxing authority.

Symbol: TEE

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Tax Expense

Pre Tax Income

Pre Tax Income is the remaining taxable income after adjusting earnings before interest and taxes (EBIT) for non-operating items.

Symbol: EBT

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Pre Tax Income

Other formulas in Tax category

Go Tax Equivalent Yield

TEQY = \frac{TFY}{1 - TR}

Go Sales Tax Amount

STA = P \cdot (\frac{ST}{100})

Go Total Sales Tax

TST = P + STA

Go Taxable Income for Individual

TII = GTI - ⌈ TE ⌉ - TD

How to Evaluate Effective Tax Rate?

Effective Tax Rate evaluator uses Effective Tax Rate = Tax Expense/Pre Tax Income to evaluate the Effective Tax Rate, The Effective Tax Rate can be calculated for historical periods by dividing the taxes paid by the pre-tax income, or earnings before tax (EBT). The formula used to calculate the effective tax rate is the ratio between the taxes paid and pre-tax income (EBT). Effective Tax Rate is denoted by ETR symbol.

How to evaluate Effective Tax Rate using this online evaluator? To use this online evaluator for Effective Tax Rate, enter Tax Expense (TEE) & Pre Tax Income (EBT) and hit the calculate button.

FAQs on Effective Tax Rate

What is the formula to find Effective Tax Rate?

The formula of Effective Tax Rate is expressed as Effective Tax Rate = Tax Expense/Pre Tax Income. Here is an example- 10 = 10000/1000.

How to calculate Effective Tax Rate?

With Tax Expense (TEE) & Pre Tax Income (EBT) we can find Effective Tax Rate using the formula - Effective Tax Rate = Tax Expense/Pre Tax Income.

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Effective Tax Rate Formula

Effective Tax Rate Example

Effective Tax Rate Solution

Effective Tax Rate Formula Elements

Other formulas in Tax category

How to Evaluate Effective Tax Rate?

FAQs on Effective Tax Rate

Variable Name