Tax Savings Rate
Percentage
Represents the percentage of potential taxes saved due to deductions, credits, or other tax strategies. A high savings rate indicates effective tax planning, which can significantly impact a company's bottom line.
Formula
(Potential Taxes - Actual Taxes Paid) / Potential Taxes x 100
Example
If a company had a potential tax of $200,000 but, due to various deductions and credits, paid only $160,000, the Tax Savings Rate would be 20%.