What is Your Effective Tax Rate?

[mickeyd]

Have you finished your 2015 taxes yet? If so, I'm curious what the group's effective rate ended up this year. TurboTax calculates it as part of the summary.

 

[GrayHare]

you might consider breaking the poll choice ranges more finely, perhaps 5% each

 

[ziggy29]

Mine says 7.88% but it is somewhat misleading because it doesn't include the 7.65% "employer" portion of the self-employment tax DW has paid as an ordained pastor since last July. In reality, in 2016 we expect self-employment tax to be more than 2/3 of the total tax we pay (both income taxes on earned income and quarterly payments for SE taxes).

 

[sengsational]

How does TT calculate effective rate? It looks like, from this, people were thinking that at least for 2014, it was whacked.

 

[sengsational]

Here's how I calculated it (H&R Block doesn't calculate it for me):

( (Line 63 [total tax]) - (Sum of lines 67 through 73 [credits]) - (Form 8962 line 25 [APTC])) / (Line 38 [AGI])

My effective rate was -32.8% (meaning they paid me 32.8% of what's on line 38).

So yeah, I voted "less than 10%"

Edit: Updated with Advance PTC.

 

[braumeister]

My effective tax rate, including state taxes to both states (we moved mid-2015) was 14%.

TurboTax seems to only calculate the effective rate for Federal taxes, not the combined rate.

 

[audreyh1]

TT doesn't include your non-taxable income either?

 

[frayne]

8.25%, got it by dividing actual tax liability by taxable income. My marginal rate is 15%.

 

[arky]

I divided what I paid in Fed tax and state tax by my total income (before standard deductions) and came up with 16%.

 

[gauss]

[-]16.3% via
line 44 (tax) divided by line 22 (total income)[/-]

18.9% via Frane's method below
line 63 (total tax) divided by line 43 (taxable income )


Was near the top of the 25% bracket this year with Roth Conversions.


ed: [-]Adding in State Income tax would take the ratio rate up to 20.2%[/-] I will leave my vote as it is (10-20% range)

-gauss

 

[frayne]

I think we need some standardization as many are doing it differently. My understanding is your effective rate is your tax liability (actual tax due) divided by taxable income (income after standard/itemized deduction and exemptions,etc.) not AGI. To be even more specific Form 1040 line 63 divided by line 43. For the sake of simplicity could we keep it just on the federal returns ?

 

[Lakedog]

Using your definition (Line 43/Line 63), mine was 15.6%. Being single with a pension is not so good with respect to fed taxes. At least no state taxes for me.

 

[braumeister]

OK, using that definition I get 16%.

But in my own records I've always used total income (Line 22) instead of taxable income to calculate my effective rate.

I'm always amused at how any mathematical question posed here tends to generate 17 different ways of manipulating the numbers.

 

[Geld ist Freiheit]

19.92
WOOHOO!!!!! I win!
No....wait..... :-/



This is your life....and it's ending one minute at a time.

 

[scrabbler1]

In 2015, the gap between my federal AGI and federal TI was larger than in previous years as an early retiree because of a large medical expense deduction. Therefore, the gap between my effective tax rate using AGI in the denominator and using TI in the denominator is also a little bigger than in other recent years as an early retiree (on a percentage basis). Using AGI, the ETR was only 1.3% of AGI but 2.1% of TI. Both are all-time lows. And for the third straight year, my federal taxes due are lower than my state taxes due.

 

[W2R]

Have you finished your 2015 taxes yet? If so, I'm curious what the group's effective rate ended up this year. TurboTax calculates it as part of the summary.

10% using the effective tax rate listed in TurboTax's summary.

 

[audreyh1]

I think we need some standardization as many are doing it differently. My understanding is your effective rate is your tax liability (actual tax due) divided by taxable income (income after standard/itemized deduction and exemptions,etc.) not AGI. To be even more specific Form 1040 line 63 divided by line 43. For the sake of simplicity could we keep it just on the federal returns ?

I thought that was how TT calculated it.

 

[N02L84ER]

0.014% federal AGI
0.027% federal taxable income
0.273% federal + state total income


less than 0% if I include PTC.

 

[pb4uski]

How does TT calculate effective rate? It looks like, from this, people were thinking that at least for 2014, it was whacked.

Total tax/Line 63 divided by Total income/Line 22. That computation agree with the numbers in my return but I don't have SE tax.

Mine is 6.82% for 2015, and my state tax rate is 2.91% for a combined rate of 9.73%

 

[Closet_Gamer]

Per TT: 29% -- so more like 36% if you incl city and state.

I'm still in the accumulation phase and it was a good year.

While the % and absolute made me absolutely cringe DW reminded me how fortunate we are and that lots of people would be delighted to have this "problem."

As a wise man once told me "You only pay taxes when good things happen."

Would still like some of my money back tho!! ��

 

[jetpack]

Turbo tax says 24% ..

AGI / fed income tax = 32%
Taxable Income / federal income tax = 34%
Taxable Income / fed + state + local = 39% <-- this is what I consider effective tax rate.

 

[rodi]

15% marginal tax rate.

Using Sengsational's method (which includes Premium Tax Credits) I get -21%.
TT also reports -21%

Using Frayne's method I get 2%.

This is my first *full* year of retirement so the first one that my income is low, we qualify for premium tax credits, etc... Prior to retirement it was more in the 12-13% range.

 

[hnzw_rui]

I thought that was how TT calculated it.

Based on a reverse calculation of my TurboTax summary sheets, it's Total Tax (1040 Line 63) / Income (1040 Line 22/37/38).

I'm not sure if TT's using Total Income or Adjusted Gross Income because my Line 22 and 37/38 are the same.

I was able to file as HoH this year so Federal Effective Tax Rate is 10.6% and State Effective Tax Rate is 1.9%. Marginal Tax Rates are 25% Federal and 6% State. Both would've been significantly higher if I had filed as single. I'm near the border of 15/25 for Federal HoH. Had some unplanned expenses so I wasn't able to increase my 457 contributions to get me down to 15%.

 

[RockyMtn]

per TT 21.92%.

 

[mickeyd]

Using numbers that TT gave me on the summary, my ETR was 16.32%.

It's great to see how non-taxable income does not affect this number.

The effective state rate in Texas is 0% for all of us.