Deferred Taxes and Tax Rates

What components make up income tax expense on the income statement?

Current tax plus deferred tax.

If a firm reports high income tax expense but low current tax, what explains the gap?

A deferred tax component is increasing tax expense.

How is the effective tax rate calculated?

Income tax expense divided by pretax income.

If pretax income is $100$ and income tax expense is $25$, what does the effective tax rate equal?

$25\%$.