Tax Expense

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.

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.