Definition

Noun: A direct tax imposed by a government on the financial income earned by individuals or entities within its jurisdiction over the course of a year. It is typically calculated as a percentage of taxable income, which is gross income minus allowable deductions and exemptions.

Usage

Income tax is levied on annual earnings. The specific rates and rules are defined by tax laws. - Individuals must file an income tax return each year. - The government uses income tax revenue to fund public services. - Her income tax liability increased after she got a promotion.

Examples

• The new law lowered the federal income tax rate for middle-class families.
• Calculating your income tax can be complicated without proper software.
• He set aside money each month to pay his estimated income tax.

Advanced Usage

• Progressive income tax: A tax system where the tax rate increases as the taxable income increases.
  • Countries with a progressive income tax aim for greater economic equality.
• Income tax bracket: A range of incomes taxed at a particular rate.
  • Moving into a higher income tax bracket doesn't mean all your income is taxed at the higher rate.

Variants and Related Words

• Taxpayer (n): A person or organization that pays tax to the government.
• Taxable income (n): The amount of income used to calculate how much tax an individual or company owes.
• Withholding tax (n): Income tax deducted from an employee's wages by an employer and paid directly to the government.

Synonyms

• Levy on earnings
• Revenue tax

Related Phrases

• Income tax return: The form(s) used to file income tax with a tax authority.
  • I need to submit my income tax return by April 15th.
• Income tax deduction: An expense that can be subtracted from gross income to reduce taxable income.
  • Charitable donations are often an allowable income tax deduction.

Noun

1. a personal tax levied on annual income