Effective Tax Rate

Your effective tax rate is total tax divided by income. It shows the share of your pay that actually goes to tax, and it sits below your top bracket because lower brackets and deductions pull it down.

Someone who pays $9,000 in total tax on $60,000 of pay has a 15% effective rate, even if their top bracket is 22%. On a paycheck, add up federal, state and local income tax plus Social Security and Medicare, then divide by gross pay. The paycheck calculator shows this as the total tax rate, and the guide to what percentage of a paycheck goes to taxes goes further.

Your marginal tax rate is what an extra dollar costs. The effective rate is the average across all your dollars. Crossing into a new tax bracket moves the marginal rate at once and the effective rate only a little. See why a paycheck can feel so low.