What is Effective tax rate?
Total tax divided by total income: the average rate actually paid across every band, rather than the rate on the top band.
This is the honest answer to "what did tax cost me this year". It is dragged below the marginal rate by every band beneath the top one and by any tax-free threshold.
effective = total tax / taxable incomeNot to be confused with Marginal tax rate
The effective rate describes the year that has happened. The marginal rate predicts what the next unit of income or deduction is worth. Using the effective rate to value a deduction understates it.