average tax rate

average tax rate definition - business

average tax rate

Taxes paid as a proportion of income. Paying $10,000 in taxes on an income of $80,000 results in an average tax rate of $10,000/$80,000 , or 12.5%. Financial decisions should be made based on a taxpayer's marginal tax rate rather than the average tax rate. Also called effective tax rate.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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