Defined Term
Effective Tax Rate
Definition
The actual percentage of your income paid in tax — always lower than the top marginal rate.
The effective tax rate is total tax paid divided by gross income, expressed as a percentage. Because progressive taxation applies different rates to different income bands, the effective rate is always lower than the marginal rate.
6% — the first €8,059 is taxed at only 13%, pulling the average down. Social security contributions are calculated separately and added to arrive at total effective burden.
WorthOf displays both marginal and effective rates for every salary input.
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