Income taxes are taxes governments levy on money earned by businesses and individuals. What’s more, they’re also many countries’ largest source of revenue: In the US, individual income taxes made up nearly half of the federal government’s revenue in 2024, while corporate income taxes added another 11% .
Because income taxes’ primary purpose is financing government operations—such as funding public programs like food stamps benefiting lower-income households—these taxes are also seen as an economic tool to redistribute resources and reduce inequality.
But taxation is historically contentious. Critics argue income taxes discourage career advancement and push payers to move to areas with lower rates.
Hours of research by our editors, distilled into minutes of clarity.
While wages and salaries are taxed progressively at rates up to 37%, long-term investments are taxed at lower rates: 0%, 15%, or 20%. For wealthy individuals like Buffett, whose income mainly comes from investments, this means paying a lower effective tax rate than someone earning a salary.
While immigrants who are authorized workers pay taxes just like anyone else, even unauthorized workers file tax returns. These unauthorized workers use individual taxpayer identification numbers.
Past presidents’ changes to tax codes have inflated the deficit. An expert on the topic explains the interplay between policy and the national budget while debunking 10 tax-related myths in this podcast.
In the 2020s, the top marginal tax rate has floated around 37%, relatively lower than previous eras. Some have called for boosting the rate significantly to tax the highest earners.
Tax avoidance isn’t the same as tax evasion. The tax code is full of legal loopholes accountants can use to lighten their clients’ tax burden. NPR shares their (and listeners’) favorite sections of the tax code in this podcast. For instance, large estates can be counted as farms and some cars count as heavy machinery. Listen to this podcast to learn about tax loopholes that range from surprising to legitimately useful.
This podcast episode takes a lighthearted dive into the history of the IRS, from when the agency was founded and called the Bureau of Internal Revenue, to that one time it had to enforce a national ban on alcohol. Want to learn more? Listen to the podcast episode.
Nobody likes filing their tax return each year, but this article takes that sentiment a step further. Specifically, the author argues that the tax system obscures certain aspects of the US tax code, making it difficult for taxpayers to accurately assess potential reforms. Learn more about why the information Americans have about our tax system might be misleading.
Before the 16th Amendment, US tax law required direct taxes (like income and property taxes) to be directly apportioned to a state's population. Due to these requirements, the federal government could not impose many direct taxes. But the 16th Amendment changed all that. To find out more about direct and indirect taxes, read this explainer.
One of the Internal Revenue Service’s jobs is enforcing the Internal Revenue Code. The Internal Revenue Code is Title 26 of the US Code, which is the official codification of federal statutes in the US. Title 26, also known as the IRS code or IRS tax code, lists the federal tax laws of the United States. Learn more about the Internal Revenue Code here.
In the US, many people think of the IRS as the “taxman”—but the Beatles song is actually about the tax structure in the UK at the time. George Harrison wrote the song when he realized that even though the Beatles had started earning money, “we were actually giving most of it away in taxes,” as he wrote in his autobiography. Learn more about the song here.
The United States is home to more than 33 million businesses, the vast majority of which are small businesses, with millions being created (and others closing shop) every year. These businesses often rely on loans, provide the goods and services that keep the economy flowing, and sometimes even grow large enough to enter public markets or provide private investment opportunities. Explore key topics central to business and finance, from the role of the Federal Reserve to how initial public offerings work, how millions of American students finance higher education, and more.