Tax Expense

What is a 'Tax Expense'

A tax expense is a liability owing to federal, state/provincial and municipal governments. Tax expenses are calculated by multiplying the appropriate tax rate of an individual or business by their income before taxes, after factoring in such variables as non-deductible items, tax assets and tax liabilities.

BREAKING DOWN 'Tax Expense'

Determining the appropriate tax rate and identifying the correct accounting methods for items affecting one's tax expense are carefully described by tax authorities such as the IRS and GAAP/IFRS.

RELATED TERMS
  1. Effective Tax Rate

    The average rate at which an individual or corporation is taxed. ...
  2. Tax Rate

    The percentage at which an individual or corporation is taxed. ...
  3. Tax Break

    A tax break is a savings on a taxpayer's liability. A tax break ...
  4. Direct Tax

    A tax that is paid directly by an individual or organization ...
  5. Net Of Tax

    An accounting figure that has been adjusted for the effects of ...
  6. Taxes

    An involuntary fee levied on corporations or individuals that ...
Related Articles
  1. Professionals

    Types Of Taxes

    These taxes are unavoidable for corporations.
  2. Taxes

    Use Tax Vs. Internet Sales Tax: How Are They Different?

    Learn about the differences between a use tax and an Internet sales tax. Find out about transactions in which the taxes apply, and to whom they apply.
  3. Economics

    What is a Tax Liability?

    Tax liability is the amount of money a person or entity owes to the government as the result of a taxable event.
  4. Economics

    Calculating Net of Tax

    Net of tax is a figure that has been adjusted for taxes.
  5. Taxes

    3 Federal Income Tax Facts You Didn't Know

    Learn about three federal income tax facts that most Americans may not know from one of the most trusted financial resources on the Web.
  6. Professionals

    Tax Accounting

    Tax Accounting
  7. Investing

    Deferred Tax Liability

    Deferred tax liability is a tax that has been assessed or is due for the current period, but has not yet been paid. The deferral arises because of timing differences between the accrual of the ...
  8. Professionals

    Permanent Vs. Temporary Items

    CFA Level 1 - Permanent Vs. Temporary Items. Learn the differences between temporary and permanent items in taxation. Discusses how timing differences create tax liabilities.
  9. Taxes

    Tax Haven Vs. Tax Shelters: Is There a Difference?

    Learn about the difference between tax havens and tax shelters, and how both are used to reduce tax liability or avoid paying taxes altogether.
  10. Professionals

    Adjustments To Financial Statements From Tax Rate Changes

    CFA Level 1 - Adjustments To Financial Statements From Tax Rate Changes. A look at how changes in tax rates affect the value of deferred tax assets on the balance sheet, including calculations ...
RELATED FAQS
  1. Do tax liabilities appear in the financial statements?

    Find out how taxes are shown on the balance sheet, the income statement and the cash flow statement, and why taxes are an ... Read Answer >>
  2. What is the justification for allowing deferred tax liabilities?

    Understand the justification for allowing deferred tax liabilities. Learn the reasoning behind why a company would want to ... Read Answer >>
  3. How does the marginal tax rate system work?

    The marginal tax rate is the rate of tax that income earners incur on each additional dollar of income. As the marginal tax ... Read Answer >>
  4. What is the difference between a state income tax and a federal income tax?

    Learn the difference between state income tax and federal income tax based on tax rates, deductions, tax credits and taxable ... Read Answer >>
  5. How does the effective tax rate for an individual differ from that of a corporation?

    Read about the effective tax rate for individuals when compared with the effective tax rate for corporations, including how ... Read Answer >>
  6. What are the differences between regressive, proportional and progressive taxes?

    Understand the differences between the most common tax systems including regressive taxes, proportional taxes and progressive ... Read Answer >>
Hot Definitions
  1. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  2. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  5. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  6. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
Trading Center