Federal and state effective tax rates (ETRs) are calculated as an individual’s total tax burden / taxable income and are a superior measure of an individual’s tax efficiency.​

Individuals with declining year-over-year effective at rates are often earning higher levels of taxable income and increasing their level of tax efficiency.

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Individuals with rising year-over-year effective at rates are often earning higher levels of taxable income, however their level of tax efficiency is decreasing.

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Often, this is due to:

 

1. strategies and opportunities to offset, defer or postpone the higher levels of taxable income may have been overlooked,

2. opportunities to offset, defer or avoid capital gains were not capitalized upon, 

3. opportunities to increase deductions, were intentionally or unintentionally not taken, and/or

4. opportunities to take advantage of tax credits (if available) were not planned for reported

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What to Do Now

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With 40% of 2024 ahead of us, as a high-income earner in the 37% tax bracket, it is essential to take a few moments to evaluate your 2021, 2022, 2023 and projected 2024 effective tax rates, and trends.

The goal is to identify if your effective tax rates are on an upward or downward trend, and to identify the driving factors behind the change.

 

Are these figures and the tax cash outflows you are on target to pay in 2024 acceptable to you? If not, let's get our conversation started. 

 

Benchmarking

Benchmarking your effective tax rates with the rates achieved by your tax-efficient colleagues with similar salary, bonus and equity awards reveals valuable information.

 

The exercise often reveals strategies and opportunities that were within reach, however overlooked, or confirms you are operating at a level of tax efficiency on par or more competitive than your tax-efficient colleagues and peers. ​

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1. If you don’t know your 2021, 2022, 2023 and projected 2024 effective tax rates,

2. aren’t comfortable with the figures and looking for ways to up-level your results, or

3. are interested in understanding if your effective tax rates are

   • as competitive

   • less competitive

   • more competitive

       than your tax efficient colleagues, and why.

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When the opportunity exists, amending a 2021, 2022 or 2023 tax return to fix the oversight

and capture the missed tax savings is advantageous.

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Reach out and get our conversation started.

 

1. We’ll evaluate 2021, 2023 and 2023 tax returns and the effective tax rates achieved,

2. Identity any oversights that may have occurred,

3. Let you know of tax savings opportunities that could be recouped by filing an amended return (if any),

4. Projected current-state 2024 effective tax rates and tax cash outflows, and

5. Projected tax cash outflows and effective tax rates for decision sets you are considering, factoring in relevant tax laws, strategies and opportunities.

6. How your effective tax rates benchmark against your tax efficient colleagues and peers

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Next Steps

 

Give our office a call or provide your contact information below. 

 

Share details important for us to know along with a few dates and times you are available.

Let us know if you prefer meeting in person, over zoom or an initial phone conversation. 

 

We'll review our calendar and confirm one or your preferences or suggest a few alternate options.