Cash Tax Rate
Calculate the cash tax rate, which measures the percentage of pretax income that is actually paid out in cash taxes, as opposed to the accrual-based effective tax rate.
The formula is as follows:
\[\text{Cash Tax Rate} = \text{Income Taxes Paid} / \text{Income Before Tax}\]The cash tax rate shows the taxes a company actually paid, which can differ for years from the tax expense in the income statement because of deferred taxes, prepayments and settlements of earlier years. Analysts compare it with the effective tax rate to see whether reported earnings rely on taxes that are deferred rather than saved. When the data has no income taxes paid for a year, the rate shows as 0, which should be read as missing, not as a company that paid no tax. A period with zero or negative income before tax has no meaningful tax rate and is NaN.
Also known as: cash effective tax rate.
Cash Tax Rate in Python or via the MCP
Install the Finance Toolkit with:
pip install financetoolkit -U
Then call get_cash_tax_rate as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(
["PG", "PEP", "COST"],
api_key="FINANCIAL_MODELING_PREP_KEY",
start_date="2021-01-01",
end_date="2025-12-31",
)
toolkit.ratios.get_cash_tax_rate()
Or, after setting up the Finance Toolkit MCP, ask:
What share of their pretax income did Procter & Gamble, PepsiCo and Costco pay in cash taxes from 2021 to 2025?
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| COST | 0.2286 | 0.2474 | 0.2632 | 0.2381 | 0.2696 |
| PEP | 0.1968 | 0.2584 | 0.2218 | 0.2565 | 0.3012 |
| PG | 0.217 | 0.2122 | 0.2331 | 0.2326 | 0.2258 |
Parameters
get_cash_tax_rate accepts the following parameters.
| Parameter | Type | Description | Example |
|---|---|---|---|
rounding | int | None | The number of decimals to round the results to. Defaults to None, which uses the rounding of the Toolkit (4 unless set otherwise). | 2 |
growth | bool | Whether to calculate the growth of the ratios. Defaults to False. | True |
lag | int | list[int] | The lag to use for the growth calculation. Defaults to 1. | 4 |
compound | bool | Whether the growth is the compound annual growth rate over the lag (e.g. lag=5 for the five-year CAGR) instead of the total change. Defaults to False. | False |
standardize | bool | Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False. | True |
trailing | int | The number of periods to sum flows (income and cash flow statement items) over, with balance sheet items averaged over the same number of period ends. E.g. 4 with quarterly data gives the trailing twelve months (TTM) and 3 with annual data a three-year cumulative figure. Defaults to None, which uses single-period flows (per quarter and not annualized with quarterly data). | 4 |