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The effective tax rate is total tax divided by total income — the blended average across every bracket your income passes through. Because lower slices are taxed at lower rates, the effective rate is always below the marginal rate. It is the truer measure of your overall tax burden.
Someone in the 24% marginal bracket might have an effective rate closer to 15%.
Educational disclaimer: All content on WealthSerene.com is for educational purposes only and does not constitute investment advice. Projections and calculations are illustrative — actual results will vary based on market conditions, your specific situation, and many factors outside this tool’s scope. Always consult a qualified financial professional for advice specific to your situation. View full disclosures →