Tax in USA

advertise here

Tax in USA

Tax in USA

  • Here we are going to give you information about Tax in USA. What are the taxes in USA?, Types of taxes?, What are taxes on income?, on goods?, for foreigners? etc. etc. 

  • All these questions will be answered through out this article in the easiest way possible.

  • As we know that there are many people who have no or very less knowledge on topics such as taxes.

  • But actually it is not that difficult to know about taxes. 

  • Lets see how easy or difficult it is...

History of Taxes in USA

  • Most of the taxes that people pay today are made in the 1920s and 1930s.

  • The taxes and other levies imposed on people was permitted by Congress when Constitution gave them the power.

  • The federal income tax was officially enacted in 1913 after the Civil War after which the creation of first income tax system in the USA was made.

  • The income tax levied on people is irrespective of their status - single, married, etc.

What are the taxes in USA?

  • A tax is money demanded by the government from your income which is required to provide facilities or services for the development of a country.

  • The purpose of taxes is to meet the expenses of government. Government collects money to be spent by the people.

  • The United States of America has different taxes on federal, state and local governments. Taxes are imposed on various different things.

  • Taxes are imposed on income, property, sales, dividends, imports, estates, businesses etc.

  • The more money you make, more tax you pay. But there's a particular income level below which you don't need to pay tax.

Tax in USA

Types of Taxes?

  • Income tax - Income tax is a small portion of amount to be paid by an individual or business on their total income to the government.

  • There are different percentage of taxes on different incomes of people.

 10%$0 - $9700 
 12% $9701 - $39475
 22% $39476 - $84200
 24% $84201 - $160,725
 32% $160,726 - $204,100
 35% $204101 - $510,300
 37% $510,301+

  • In the above table, we can see the income tax imposed on individuals or businesses. As the income increases the tax rate also increases.

  • Property Tax - Local governments impose property tax, as a principal source of revenue. This tax is imposed on property or real estate.

  • Tax property includes house, farm, business property and also other property in the businesses.

  • The amount of tax is determined by the market value of each property annually at a particular date. The ta amount remains with the local governments.

  • Eg. If the property tax is 4% annually, and if the amount of your property is valued at $100,000 than the tax amount will be (0.4 * 100000) i.e. $4000.

Tax in USA

  • Sales Tax - Sales Tax is the amount to be paid by the consumer on the goods or services that they purchase.

  • It is the additional amount to be paid on any purchase in the retail location. 

  • Eg. If you buy a n oven for $500 and if the sales tax in that city/state is 7% then you pay additional $35 on the original amount.

  • Sales tax is used by government to fund local works like road construction, schools, wages etc.

  • Import Tax - Import tax is a tax collected by customs for importing goods in the country.

  • USA mostly imports industrial goods, and the import tax is around 2% on the goods.

  • Taxation of Foreign Nationals - The tax on Foreign nationals in US is around 30%, which may be reduced by a tax treaty.

  • If you are a green card holder then you pay taxes just like any other US citizens.

Tax in USA

USA Tax system

  • The tax system in USA is set in both federal and state level. Both the taxes are different from each other and they operate separately.

  • They can charge the tax taxes by their own authority. They don't interfere in each other's taxes.

  • Different states can charge different taxes. Then separate towns can also charge taxes if they feel they should.

  • Federal tax remains same throughout the country. The tax system is quite complex in the USA. 

Check our other educational posts: