Daily Archives: 7-September-2018

Using Excel to Compute Effective Tax Rate

I have been working as a contractor for the last few months and it is now time for me to make a quarterly tax payment to the folks at the Internal Revenue Service (IRS). This involves using some tables listed on Form 1040ES (see Appendix A). The US tax code uses has a graduated tax rate; the tax rates on higher amounts of income are higher than on lower amounts. As I calculated my tax payment, I became curious as to my effective tax rate. I am going to use Excel to duplicate a graph that I saw on the Wikipedia. My version of the graph is shown in Figure 1. Continue reading

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