9.46% Effective Tax Rate for 2011
Well, I finished my taxes. Yahoo! That's about a month later than usual, but the trickling in of tax documents seems to be taking longer every year. I still can't seem to get my withholding right to keep me from getting a large refund. I've used the calculator at the IRS, but like most things IRS-related, it's not exactly intuitive. I know there's worse things in the world, but I hate, hate, hate giving the US government an interest-free loan. When my refund comes it will be a nice chunk towards funding one of my Roth's for this year though.
I use TurboTax, a sponsor of this website, for my returns. I have for at least the past 6 years. It has made my life much easier because so much of the detail is simply transferred from one year to the next. One of the interesting figures that TurboTax calculates is your effective tax rate. What's an effective tax rate? It's the the actual rate at which you are paying taxes on your total income. Effective tax rate is calculated by taking your total tax paid and dividing by your total taxable income. My effective tax rate over time looks like this:
My average effective tax rate over that time is 9.4%.
What about you? How does your effective rate compare?