Income taxes are taxes that individuals and businesses pay to the government based on their income. These taxes are typically calculated as a percentage of a person's or company's earnings.
Related terms
Tax Brackets: Tax brackets refer to different income ranges that determine the rate at which individuals or businesses are taxed. Each tax bracket has its own corresponding tax rate.
Marginal Tax Rate: The marginal tax rate is the percentage of an additional dollar earned that must be paid in taxes. It represents the tax rate applied to the last dollar earned.
Progressive Tax System: A progressive tax system is one in which people with higher incomes pay a larger proportion of their income in taxes compared to those with lower incomes. The tax rates increase as income levels rise.