Effective Corporate Tax Rate Calculator

Calculate your company's effective corporate tax rate from pre-tax income and tax expense. Compare to statutory rate.

Use the Effective Corporate Tax Rate Calculator

Enter pre-tax income and tax expense. Optionally exclude deferred tax to see current tax rate.

Tax & income

Pre-tax income and tax expense. Optionally use current tax only (exclude deferred).

Pre-tax income ($)

Total income tax expense ($)

Use current tax only (exclude deferred)

Results

Effective corporate tax rate

21%

Tax expense used

$105,000

Effective rate = Tax expense ÷ Pre-tax income × 100. This often differs from the statutory rate because of deductions, credits, and timing.

What this metric means

Effective corporate tax rate is the percentage of pre-tax income paid as tax. It matters for forecasting, benchmarking, and understanding true tax burden.

How to calculate it

Effective rate = Tax expense ÷ Pre-tax income × 100. Use income statement figures. Optionally exclude deferred tax to get a current (cash) tax rate.

How to improve the metric

Legitimate levers include using available deductions and credits, structuring across jurisdictions, and timing of income and expenses. Always get professional advice.

Common mistakes

Mixing up statutory and effective rate; using the wrong tax number (e.g. including other taxes); or comparing across different accounting standards without adjustment.

How to interpret your result

Compare to your jurisdiction's statutory rate and to prior years. A stable or declining effective rate with growing income often reflects good planning; sudden swings warrant a review.

FAQs

What is effective corporate tax rate?▾

It's total income tax expense (or current tax only) divided by pre-tax income, expressed as a percentage. It reflects what you actually pay, not the headline statutory rate.

Why does it differ from the statutory rate?▾

Deductions, credits, different jurisdictions, and timing (e.g. deferred tax) all affect the actual tax paid. Effective rate is the real burden.

Should I use total or current tax only?▾

Total tax expense includes deferred tax; use it for a full picture. Use current tax only if you want the cash tax rate for the period.

Is a lower effective rate always better?▾

From a cash perspective, yes—less tax paid. But very low effective rates can attract scrutiny; ensure positions are supportable.

Related tools

Browse all calculators on NetGrow.

Use the Effective Corporate Tax Rate Calculator

Enter pre-tax income and tax expense. Optionally exclude deferred tax to see current tax rate.

Tax & income

Pre-tax income and tax expense. Optionally use current tax only (exclude deferred).

Pre-tax income ($)

Total income tax expense ($)

Use current tax only (exclude deferred)

Results

Effective corporate tax rate

21%

Tax expense used

$105,000

Effective rate = Tax expense ÷ Pre-tax income × 100. This often differs from the statutory rate because of deductions, credits, and timing.

FAQs

What is effective corporate tax rate?▾

It's total income tax expense (or current tax only) divided by pre-tax income, expressed as a percentage. It reflects what you actually pay, not the headline statutory rate.

Why does it differ from the statutory rate?▾

Deductions, credits, different jurisdictions, and timing (e.g. deferred tax) all affect the actual tax paid. Effective rate is the real burden.

Should I use total or current tax only?▾

Total tax expense includes deferred tax; use it for a full picture. Use current tax only if you want the cash tax rate for the period.

Is a lower effective rate always better?▾

From a cash perspective, yes—less tax paid. But very low effective rates can attract scrutiny; ensure positions are supportable.