Types of Taxes

The United States taxation system has a long, sordid history dating back from the Boston Tea Party British taxation revolutions to the controversial federal tax cuts of former President George W. Bush. Throughout its young history, the United States has been able to come up with a comprehensive, fair and capable taxation system.

The nation taxes all its citizens and businesses on a variety of levels: federal, state and local. Its taxes are imposed for different items, such as income, sales or gifts, as well as many more reasons. Generally, taxes are imposed on individuals or corporations that are U.S. citizens or operating on U.S. soil and each person or entity is held accountable for filing their own taxes by April 15th of each year or whenever otherwise noted. If taxes aren't filed, the individual or company can be audited and fined by the Internal Revenue Service (IRS), which is the branch of government dealing with taxation. The amount one is taxed is variable depending on federal, state and local jurisdiction rates; most of these taxation levels are graduated. This means that the tax rate someone or something is taxed upon depends on which bracket of income or revenue they fall under. Those with lower income will be taxed at a lower rate, while those with a higher income will be taxed a higher rate. This rate is also subject to change depending on inflation and other economic factors. Not only are tax rates subject to change but so are minimum or maximum income values and the special deductions or exemptions that are allowed. Therefore, there is no guarantee that the taxes someone paid one year will be the same or even similar the following year.

Income Tax

The most standard type of taxation most people are immediately familiar with and personally affected by are income taxes. All U.S. citizens, corporations and estates are subject to this tax. The tax depends on brackets of income someone falls into and the tax rate is graduated based on these brackets. Therefore, those with lower incomes will pay a lower tax rate, while those with higher incomes will pay a higher tax rate.

Income Tax

Payroll Tax

Payroll taxes refer to two specific kinds of taxes: those that an employer needs to withhold from their employees' payment checks and those that an employer pays themselves for their employees' packages, plans and benefits. The payroll tax is generally processed and set by the Federal government to ensure that tax income payments are made and to hold employers responsible for their employees' benefits and rights.

Payroll Tax

Customs & Duties

Customs and duties are sometimes also known as tariffs. These are taxes paid on imported, foreign goods. The taxes can vary depending on which country the items are coming in from and what exactly the goods are. All items coming into the United States are required to pay this tax, unless there is a specific agreement between the countries. If the taxes aren't paid, then the U.S. government may seize the items and charge the importers.

Customs & Duties

Miscellaneous Taxes

There are other fees imposed to United States citizens and visitors that aren't classified strictly as taxes (as in, there is no need to declare them on any individual or business tax form). Nonetheless, these fees still must be paid in order to operate vehicles or make use of government owned, public establishments. Furthermore, certain occupations require licensing and occupational taxes and fees. These can vary depending on the occupation, as well as the requirement for renewal (annually vs. every couple of years).

Miscellaneous Taxes

Sales & Excise Tax

Although the federal government hasn't set a federal sales tax rate, nearly every state and most local jurisdictions have imposed sales and excise tax rates. The rates generally depend on the state and the local area, with wide variations occurring in close communities. Although certain goods are exempt from sales taxes, such as most foods sold in grocery stores, almost all other retail goods are subject to a tax.

Sales & Excise Tax

Property Tax

Property taxes are imposed by local governments on various real estate property interests and some private business property. The value of the rate depends on the local government and several jurisdictions can tax the same property, although states will cap the amount. Local tax assessors, who are employed by each jurisdiction to find the fair market values of properties, calculate the value of the tax.

Property Tax

Estage & Gift Tax

An estate is imposed when passing on property or goods after a death. A gift tax occurs if the original owner is still alive. The tax can be imposed at both the federal and state level. The tax is imposed on the estate, not the person inheriting the property, although some states can impose inheritance taxes as well. At the federal level, a generational-skipping tax can be imposed for grandchildren inheriting property. The amount of tax to be paid depends on the total amount of the taxable gifts or inheritance.

Estate & Gift Tax