Tax Expense

Tax expense is a fancy way of saying “the taxes you must pay.” You take your taxable income (some things you can deduct, so those aren’t taxable) and multiply it by your tax rate to get your tax expense. Easy peasy.

While it sounds pretty straightforward, we all know taxes are anything but. There’s many kinds and tiers of taxes, which quickly makes this calculations more complicated. Keep going down the rabbit hole of special rules, loopholes, exemptions, deductions, and jurisdictions, and eventually you’ll practically be a tax advisor. Best leave that for the tax advisors, unless you’re into that kind of thing (we don’t kink-shame at Shmoop!).