The effective tax rate is the income tax expenses divided by pretax incomes. For individuals, this tax rate is the average rate at which their earned income is taxed. But whereas for a company, it is the average rate at which its pre-tax profits are taxed. This page shows the effective tax rate formula to calculate tax rate of an organization. Just divide the income tax expenses and pretax income and multiply the resultant value with 100 to get the tax rate.