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Effective Rate

   Also found in: Dictionary/thesaurus, Financial, Encyclopedia, Wikipedia 0.01 sec.

Another name for annual percentage rate that refers to the amount of yearly interest to be charged by a lender on the money borrowed by a debtor.

In federal Income Tax law, the actual tax rate that an individual taxpayer pays based upon his or her taxable income.

Federal income tax laws increase the rate of taxation as a taxpayer reaches certain marginal income levels. For example, taxpayers might pay a tax rate of 20 percent on the first $10,000 of taxable income. Thereafter, any increase in income up to an additional $5,000 might be taxable at a rate of 22 percent on that $5,000. The effective rate of tax is computed by dividing the total amount of tax paid by the total of the person's taxable income, adding the tax paid on the person's first $10,000 at a 20 percent rate to the tax paid on the next $5,000 that is at a 22 percent rate. The effective rate is not an average of the tax rates imposed since the average does not take into account the differences in the marginal income levels. A taxpayer's effective tax rate is, however, more than the person's bottom marginal rate but less than his or her top marginal rate.



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TAX, CUSTOM AND OTHER INCENTIVES * 10 YEAR TAX HOLIDAY--Investors in TIDZs are entitled to 10-year profit tax exemption and to 50% reduction of personal income tax for a period of 5 years, so that the effective rate of personal income tax will amount to 5%.
For non combat (sustained): 50 rounds per minute effective rate of fire, which means any combination of bursts not to exceed 50 rounds within a one minute period.
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