Effective Tax Rate - ENGAGE CPAs

The effective tax rate is the percentage of income that an individual pays in taxes. If you and your spouse file a joint tax return and have $100,000 of income and pay $15,000 in taxes, your effective tax rate is 15%. So while your marginal tax rate might be 22%, because you have income taxed at 10%, 12% and 22%. This means that you don't pay 22% tax on all income; it's actually lower than that.
It is calculated by totaling up all taxes paid on income and dividing that by the total income that is being taxed in those jurisdictions.