Should we use effective tax rate or tax brackets ?

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texbruin
Posts: 1
Joined: Fri Aug 31, 2018 4:31 pm

Should we use effective tax rate or tax brackets ?

Post by texbruin »

For Investment Tax Rate and Income Tax Rate, should we use tax brackets or effective tax rate ? I'm assuming the latter since it reflects net deductions and directly impacts cash flow.
jimr
Posts: 821
Joined: Thu Feb 28, 2008 6:48 pm

Re: Should we use effective tax rate or tax brackets ?

Post by jimr »

Generally it makes the most sense to use an average or effective tax rate. Also, don't forget to account for any state or local income taxes that you'll have to pay.
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