Effective Tax Rate
The average rate you actually pay across all your income, total tax divided by total income.
Your effective tax rate is your total tax divided by your total income, the blended average across every bracket your income passes through. Because lower brackets tax your early dollars at low rates, your effective rate is always lower than your marginal (top-bracket) rate.
It's the right number for understanding your overall tax burden, while your marginal rate is the right number for decisions about the next dollar. Confusing the two is a common mistake: people overestimate the tax on a conversion or a bonus by applying their effective rate, or panic about a marginal rate that only touches a thin slice of income.
This definition is general information to help you understand a term, not financial, tax, or legal advice. Figures that change year to year (limits, thresholds, rates) should be confirmed against current official sources. For guidance on your situation, a licensed fee-only fiduciary is the right next step.