Effective Tax Rate
Calculate the effective tax rate, a financial ratio that measures the percentage of pretax income that is paid as taxes.
The effective tax rate is calculated by dividing the income tax expense by the pre-tax income.
The formula is as follows:
\[\text{Effective Tax Rate} = \text{Income Tax Expense} / \text{Income Before Tax}\]Also known as: tax burden, actual tax rate.
Effective Tax Rate in Python
get_effective_tax_rate is part of the Ratios module of the open-source Finance Toolkit. Install it with:
pip install financetoolkit -U
Then call get_effective_tax_rate as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(["AAPL", "TSLA"], api_key="FINANCIAL_MODELING_PREP_KEY")
effective_tax_rate = toolkit.ratios.get_effective_tax_rate()
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| AAPL | 0.133 | 0.162 | 0.1472 | 0.2409 | 0.1561 |
| TSLA | 0.1102 | 0.0825 | -0.5015 | 0.2043 | 0.2696 |
Parameters
get_effective_tax_rate accepts the following parameters:
- rounding (int, optional): The number of decimals to round the results to. Defaults to 4.
- growth (bool, optional): Whether to calculate the growth of the ratios. Defaults to False.
- lag (int | str, optional): The lag to use for the growth calculation. Defaults to 1.
- standardize (bool, optional): Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False.
- trailing (int): Defines whether to select a trailing period. E.g. when selecting 4 with quarterly data, the TTM is calculated.