The five most common taxes Americans pay are:
- Federal income tax: This is a tax on the income earned by individuals and businesses at the federal level. The tax rate varies depending on the amount of income earned and is progressive, meaning that higher earners pay a higher percentage of their income in taxes.
- State income tax: Most states in the US also have their own income tax, which is usually a percentage of the taxpayer’s federal taxable income. Some states, however, do not have a state income tax.
- Social Security tax: Also known as the FICA tax, this tax is used to fund Social Security benefits for retirees, disabled individuals, and their families. Both employees and employers contribute to this tax, which is a percentage of the employee’s wages.
- Medicare tax: Similar to the Social Security tax, the Medicare tax is used to fund healthcare benefits for older Americans. Both employees and employers also contribute to this tax, which is a percentage of the employee’s wages.
- Sales tax: This is a tax on the purchase of goods and services and is imposed by state and local governments. The tax rate varies by state and can range from 0% to over 10%. Some states do not have a sales tax.
It’s worth noting that there are many other taxes that Americans may pay, such as property taxes, estate taxes, and excise taxes on certain goods like alcohol and tobacco.