Federal taxes are taxes that are levied by the United States federal government on income, goods, and services. The Internal Revenue Service (IRS) is in charge of collecting and enforcing federal taxes.
Some of the most common types of federal taxes include:
- Income tax: This tax is based on an individual’s income, with higher earners typically paying a higher percentage of their income in taxes.
- Payroll tax: This tax is deducted from an employee’s paycheck to fund Social Security and Medicare programs.
- Corporate tax: This tax is levied on the profits of corporations.
- Estate tax: This tax is applied to the assets of a deceased person’s estate above a certain threshold.
- Excise tax: This tax is applied to specific goods and services, such as gasoline or tobacco.
Federal taxes play an important role in funding government programs and services, such as national defense, education, and social welfare programs. The tax code is complex, and individuals and businesses may need to consult with tax professionals to ensure compliance with tax laws and to minimize tax liability.« Back to Glossary Index