Calculate your effective blended tax rate across different income sources.
Your Blended Tax Rate
— %
Understanding the Blended Tax Rate
The blended tax rate is a crucial metric for individuals and businesses with multiple income streams taxed at different rates. It represents the overall effective tax rate paid on the sum of all income. Unlike a marginal tax rate, which applies to the last dollar earned, the blended tax rate provides a holistic view of your tax burden across all your earnings.
This calculator helps you determine your blended tax rate by simply inputting your total income from all sources and the total amount of taxes you've paid on that income.
Total Taxes Paid: This includes all income taxes paid, federal, state, local, and any other relevant taxes on all your income sources.
Total Income: This is the sum of all income from all sources before any tax deductions.
Why is the Blended Tax Rate Important?
Financial Planning: Understanding your blended tax rate is essential for accurate budgeting, saving, and investment planning. It helps you forecast your after-tax income more precisely.
Tax Strategy: It can highlight areas where your tax burden is disproportionately high, potentially informing strategies to optimize your income structure or utilize tax-advantaged accounts.
Comparison: If you have different investment vehicles or income types (e.g., wages, capital gains, rental income), the blended rate helps you see the overall tax impact.
Example Calculation:
Let's say an individual earns:
$70,000 from their primary job (taxed at a higher rate).
$15,000 from capital gains (taxed at a lower rate).
$5,000 from rental property income (subject to different deductions and rates).
Their Total Income is $70,000 + $15,000 + $5,000 = $90,000.
Suppose they paid a total of $20,000 in taxes across all these income sources.
Using the calculator or the formula:
Blended Tax Rate = ($20,000 / $90,000) * 100
Blended Tax Rate ≈ 22.22%
This means, on average, they paid approximately 22.22% of their total income in taxes. This blended rate gives a clearer picture of their overall tax efficiency than looking at the individual marginal rates of each income source alone.
function calculateBlendedTaxRate() {
var totalIncomeInput = document.getElementById("totalIncome");
var totalTaxesPaidInput = document.getElementById("totalTaxesPaid");
var resultDiv = document.getElementById("result").querySelector(".value");
var totalIncome = parseFloat(totalIncomeInput.value);
var totalTaxesPaid = parseFloat(totalTaxesPaidInput.value);
if (isNaN(totalIncome) || isNaN(totalTaxesPaid)) {
resultDiv.textContent = "Invalid input";
resultDiv.style.color = "#dc3545";
return;
}
if (totalIncome < 0 || totalTaxesPaid < 0) {
resultDiv.textContent = "Cannot be negative";
resultDiv.style.color = "#dc3545";
return;
}
if (totalIncome === 0) {
resultDiv.textContent = "0.00 %";
resultDiv.style.color = "#28a745";
return;
}
var blendedTaxRate = (totalTaxesPaid / totalIncome) * 100;
if (blendedTaxRate < 0) {
blendedTaxRate = 0;
}
resultDiv.textContent = blendedTaxRate.toFixed(2) + " %";
resultDiv.style.color = "#28a745";
}