When most people talk about marginal tax rates, they’re referring to the top tax bracket for their taxable income. For example, a person with taxable income for the year of $1,000,000 would have a marginal rate of 39.6%. So would an individual with taxable income of $425,000.
http://www.doughroller.net/taxes/marginal-vs-effective-tax-rates/
The net effect is a tax savings that is a weighted average between the 28% and 25% tax brackets. The move from one marginal tax rate to another, as well as the phaseout of deductions and credits, complicates the choice between a pretax and Roth retirement account.
http://www.doughroller.net/taxes/marginal-vs-effective-tax-rates/
That is the equalizing factor. The Net Effective Rate Per Annum tells you what you are effectively paying in every “YEAR” of the lease taking into account the time value of money. So you can compare 3 year, 5 year, 10 year, 15 year, 20 year deals side by side.
https://www.procalc.com/2014/04/what-is-the-net-effective-rate/
The formula for an effective tax rate is simply the individual's total taxes paid, divided by total income. It represents a measure of the total tax burden that the client bears on all his/her income. Example 4. Assume a couple has $200,000 of total income, and $30,000 of total deductions.
https://www.kitces.com/blog/Understanding-Marginal-Tax-Rate-Vs-Effective-Tax-Rate-And-When-To-Use-Each/
The ProCalc Net Effective Rate (NER) is the single amount that you can pay in every year of the lease, as an equal level payment, that (and here is the important part) WILL YIELD THE EXACT SAME PRESENT VALUE AS WHAT YOUR CASH FLOW IS SHOWING. A typical cash flow will include a bunch of different costs.
https://www.procalc.com/2014/04/what-is-the-net-effective-rate/
Accordingly, the client is subject to a 28% marginal tax rate next year ($280 of taxes divided by $1,000 of income) and a 33% marginal tax rate this year (which means the client might decide that, at the margin, it's better to take that $1,000 IRA withdrawal next year).
https://www.kitces.com/blog/Understanding-Marginal-Tax-Rate-Vs-Effective-Tax-Rate-And-When-To-Use-Each/
The marginal tax rate is the amount of tax paid on an additional dollar of income. Add one dollar of taxable income to your return, determine the amount of additional tax you’d pay, and divided that tax by the $1 of income. The result is your marginal tax rate.
http://www.doughroller.net/taxes/marginal-vs-effective-tax-rates/
Equally as important as knowing what the Net Effective Rate is, you must also know what it isn’t. There are other lease analysis programs out there that will tell you the “Average Present Value” is the Net Effective Rate of the deal. Nothing could be further from the truth or more incorrect.
https://www.procalc.com/2014/04/what-is-the-net-effective-rate/
The client's effective rate would be $35,379 (total taxes) / $200,000 (total income) = ~17.7%, which means that 17.7% of the client's total income was consumed by his/her tax liability. Notably, in practice the calculation of effective tax rates varies slightly, depending on what is used as a measure of total income.
https://www.kitces.com/blog/Understanding-Marginal-Tax-Rate-Vs-Effective-Tax-Rate-And-When-To-Use-Each/
Net taxable income would be $150,000 - $25,000 = $125,000, which would put the couple in the 25% tax bracket. If this couple had another $1,000 of income, however, the marginal tax rate would not simply be the 25% tax bracket.
https://www.kitces.com/blog/Understanding-Marginal-Tax-Rate-Vs-Effective-Tax-Rate-And-When-To-Use-Each/
what is the net effective tax rate
The net effective tax rate is between 28% to 25%.