Your 2023 effective tax rate

[Still Learning]

11.4. Increased this tax season due to new non-retirement brokerage accounts and bank CDs. Next year CDs will double results.

 

[Tadpole]

19% Federal
0% State (8.8% sales tax rate with medium property tax rates on bloated house values)

 

[Fermion]

We owe $2 this year. I miscalculated slightly.

So that is around a 0.066% rate

 

[pb4uski]

TT says 8.61% and that is line 24 total tax divided by line 9 total income.

I think of it differently and add back SS that isn't taxed to the denominator and on that basis it is 8.48%.

If I had tax-free muni income then I would add that to the denominator too... IOW I'm more interested in total tax in relation to total income received.

 

[erkevin]

14.4% for Fed. Even though I paid quarterly estimated this year, i still have to write a fat check come April (insert "unhappy dance" here).

 

[Koolau]

Too much!

 

[Jeffman52]

Still working so full salaries are involved but State and Federal combined taxes were 21.59%. Federal alone was 18.23%

 

[konokwee]

Federal: 14.66%
State: 5.5%

 

[mrfeh]

Turns out our state tax was also below 0% - taxes owed amounted to $11xx but there was a one time sales tax refund of $800 per person.

Effective rate of -1.9%

 

[karen1972]

2.35% Fed, 3.05% State

 

[pb4uski]

Still working so full salaries are involved but State and Federal combined taxes were 21.59%. Federal alone was 18.23%

You made me look. Last full year working was 18.36% federal. Bad old days

 

[Jerry1]

FWIW, per TT - 7.48%

 

[CardsFan]

You made me look. Last full year working was 18.36% federal. Bad old days

Made me look too. While working, we hovered around 16% (+/-1) fed. This is the TT calc, which is actually a little high (per pb4uski's note above) since it does not include deferred income (tIRA, 401k, etc) or tax free bonds.

In the grand scheme of things, I never considered that too high a tax to pay. And now with Roth conversions and RMD's I expect we will live in this area, or above, for the rest of our lives.

 

[scrabbler1]

Okay, I'll play.

As a % of federal AGI, I am paying 6% in combined federal and state income taxes, my all-time low by a small amount.

My all-time high in combined fed+state income taxes was 25.1%, back in 2000, my last full year working full-time. In 2008, my last year working (part-time, but I had a big company stock payout mostly taxed as LTCG), this rate was 21.9%, higher than every year from 2001 and later, including all the part-time years 2001-2008.

 

[USGrant1962]

TT says 8.61% and that is line 24 total tax divided by line 9 total income.

...

That makes sense, except the missing non-taxable income (mostly muni interest). Using AGI (Line [-]12[/-], bad typo Line 11) doesn't sense unless you have no adjustments and it is the same as Line 9. The AGI calculation (Line 10 and Schedule 1) is mostly bunch of "above the line" tax deductions, just like the regular deductions on line 12 and 13. Starting with AGI ignores that and makes your effective rate look higher than it is.

I haven't quite finished my taxes but my ETR is around 20%, largely due to Self Employment Tax on part time consulting income.

 

[audreyh1]

Gross Income (before top line deductions) plus tax exempt interest - divide that into total income tax owed.

Self employed are going to see higher tax rates due to paying FICA plus income tax.

 

[Trailwalker]

Our's is slightly negative due to the ACA adjustment. I was more aggressive for next year's income estimate. Still doable but probably won't do a Roth conversion.

 

[copyright1997reloaded]

These kind of threads depress me when I see all these other FIRE'd folks report.

Using the Line 24 / Line 11 methodology, for 2022: 18.2%

 

[pb4uski]

... I haven't quite finished my taxes but my ETR is around 20%, largely due to Self Employment Tax on part time consulting income.

I guess I would exclude SE tax from the calculation as it isn't income tax, its the self-employment version of payroll taxes.

 

[USGrant1962]

I guess I would exclude SE tax from the calculation as it isn't income tax, its the self-employment version of payroll taxes.

Yes and no. It's all Form 1040. QBI and SE Health Insurance deductions somewhat offset it and they are for SE only too.

Without SE tax I'm about 10%.

 

[RobLJ]

Estimate 8.4% but I'm estimating ordinary/qualified dividends and capital gains. Somewhere between 8.1-8.5% though.

 

[W2R]

TurboTax says my 2023 effective tax rate was 11.79%, up from 11.02% in 2022.

 

[Kork13]

It's not a final number, but I've gotten to a 95% solution on my first run through taxes for this year ... Looks like we'll end up around 7%.

 

[target2019]

Gross Income (before top line deductions) plus tax exempt interest - divide that into total income tax owed.

Self employed are going to see higher tax rates due to paying FICA plus income tax.

So, line 9 total income for the denominator, line 24 total tax for the numerator?

That gives me the same number as TurboTax Two-Year Report.

 

[mrfeh]

So, line 9 total income for the denominator, line 24 total tax for the numerator?

That gives me the same number as TurboTax Two-Year Report.

This method includes SE tax, which is misleading, IMO.

I don't know the exact way TT comes up with ETR, but somewhere they remove SE tax.