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**Average Tax Rate:** The average amount of tax a person pays based on their taxable income. It is calculated by dividing the total tax paid by the taxable income. Another term for this is effective tax rate. Marginal tax rate is the rate applied to the last dollar earned and is used to calculate the tax effect of additional income or deductions. Tax rate is a mathematical figure expressed as a percentage used to calculate taxes.

**Definition:** Average tax rate is a mathematical figure expressed as a percentage that is used to calculate a tax. It is the taxpayer's tax liability divided by the amount of taxable income. It is also known as effective tax rate.

**Examples:**

- If a taxpayer has a tax liability of $10,000 and a taxable income of $100,000, the average tax rate would be 10% ($10,000 ÷ $100,000).
- Another example would be if a taxpayer has a tax liability of $5,000 and a taxable income of $50,000, the average tax rate would be 10% ($5,000 ÷ $50,000).

These examples illustrate how the average tax rate is calculated by dividing the tax liability by the taxable income. It is important to note that the average tax rate may vary depending on the taxpayer's income and tax bracket.

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