Effective Rate

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Effective Rate

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.

References in periodicals archive ?
Unfortunately, most MRSK branches have underperformed the regulatory benchmarks for controllable operating costs, and in some cases, by extremely wide margins, which led to lower effective rates of return on RAB.
The effective rate on a Zopa Loan is reduced every time someone invests in a Zopa CD linked to that loan.
The general theme is to use deductions against income taxed at the highest effective rates.
An agreement also provides a method to reconcile the effective rate with a taxpayer's actual use tax liability.
An excess credit position means a higher effective tax rate due to inefficient use of foreign taxes paid; an excess limitation position means a higher effective rate due to inefficient use of foreign-source income.
69%, representing a spread of 60 basis points over treasuries, and an effective rate reflecting the cost of the treasury lock of 7.
Currently, Class IIa is taxed at an effective rate of 1.
To determine whether there is a disparity between the effective rate at which the hybrid branch payment is taxed to the payee and a hypothetical tax rate that measures the payor's tax savings from the deductible payment, the percentage tests provided in Regs.
02%, representing a spread of 50 basis points over treasuries, and an effective rate reflecting the benefit of the treasury lock of 6.
Under the constant-yield method, interest is accrued by applying an effective rate of interest to the unpaid balance of a loan for a given period.
has taken advantage of the State's recently expanded subsdized program offerings and is now offering to qualified borrowers the opportunity to finance septic repairs at an effective rate of 0%, 5% or 8% depending upon the borrowers income.
Compared to other solutions in the market, ECI's 10G LAN solution is unique in that it transparently maps full rate 10G LAN signals to full OTN line rate, without compromising the Ethernet transmission by not overriding important bytes and without limiting the effective rate.
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