When preparing a Form 1040 in TaxSlayer Pro, at the top of the interactive screen is a field labeled "Effective Tax Rate". The percentage shown is equal to the total tax (reduced by nonrefundable credits) divided by the taxable income.
+ additional taxes on Schedule 2
− nonrefundable credits on Schedule 3
− nonrefundable credits on Schedule 8812
Adjusted gross income
− qualified business income deduction
− either standard deduction or itemized deductions
Depending on the composition of the return, the effective tax rate can easily exceed 100%, i.e., the total tax being greater than the taxable income.