Rate Your Tax Bite On average, many Americans do not know the percentage of their income that goes to paying taxes. Most associate taxes with income taxes and rarely take into account Social Security tax, state sales taxes, and other non-income taxes. The chart below will enable an individual to estimate his/her “effective rate” of tax – i.e., how much income really goes to paying taxes of various kinds. It is important that individuals understand the impact taxation has on achieving their financial goals. In order to get started, an individual will need a copy of his/her most recent federal and state income tax returns, along with his/her W-2 and 1099 forms for the same year. To estimate the percentage of income paid out in taxes, fill in the amounts indicated below. Gross Income This includes salary from all W-2s for both spouses, interest and dividend income from the 1099 forms, Schedule C net income, and any income from partnerships, S Corporations, or other business interests that appeared on the income section of your return. $__________________ Your Total State Income Tax Includes amount(s) shown on state income tax returns.   $__________________ Your FICA Tax Write the amount of Social Security tax and Medicare tax withheld: this is shown on your W-2. Note that if you are self-employed, your self-employment tax (Social Security and Medicare tax for the self-employed) is included in the “total federal tax” item above.   $__________________ Real Estate Tax From Schedule A of your tax return, or from real estate tax bill.   $__________________ Sales Tax Multiply your Gross Income by 1/3 (an estimate of the average taxpayer’s “disposable income”); then multiply that amount by the applicable sales tax rate for your state.   $__________________ Total Taxes Add together all the taxes you have paid.   $__________________ Effective Tax Rate Divide Total Taxes by Gross Income. This is an estimate of your effective tax rate.   %__________________ It should be emphasized that this is merely a general discussion on estimating an individual’s effective tax rate. If you are interested in completing a thorough analysis of your own tax situation consultation with a financial advisor or tax professional is recommended.