Posted in Finance, Accounting and Economics Terms, Total Reads: 455
Definition: Effective Tax Rate
Effective tax rate connotes average tax paid by an individual or by a corporation. An individual is taxed on his personal income from all sources and an organization is taxed on its EBT (earning before tax) .The most widely used method of taxation is marginal tax system. Here the taxable income is divided into tax slabs and we follow a progressive taxation system, which is the higher the income the higher the tax rate.