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% .
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Some states in the US have higher taxes than others. Hawaii, for instance, has the highest total tax burden in the country at 13.9%, whereas Alaska has the lowest overall tax burden at 4.9%. New York has the highest individual income tax burden; and eight states have no individual income tax. See a map of the most-taxed US states here.
Corporate taxes, which make up roughly a third of the federal government’s revenue, have been calculated using a flat 21% rate since the Tax Cuts & Jobs Act of 2017. The current rate is considered low both by historic standards (it averaged over 50% in the 1950s and 1960s) and compared to other countries. Learn more about corporate taxes using see data visualizations in this article.
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.
The Internal Revenue Service is led by a commissioner, who leads the IRS for a five-year term after being selected by the president of the United States. Under the commissioner, the IRS has multiple subdivisions that work on different tax groups, such as the Wage and Investment Division to handle individual wage earners. Find out more 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.
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.
The US’s highest marginal income tax rate is 37%. That rate is compared to other countries’ both in a map and accompanying chart. Denmark has the highest rate at nearly 56%, while a handful of countries don’t use marginal taxes at all. In the Middle East, many countries count on oil and gas to finance their governments. See how the US stacks up with this data visualization.
The US government made nearly half of its total revenue last year from individual income taxes, and this year is shaping up to be similar. The US makes money from a variety of other sources, including Medicare taxes and corporate income taxes. But the deficit continues to grow: The US spent $1.82T more than it made in fiscal 2024. To learn more, check out the federal government’s revenue counter.
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.
From July 1 to July 7, 2024, Pew Research Center conducted a survey of 9,424 adults to gauge the public’s attitudes about the federal government, including government agencies and departments. To see the survey’s findings, including a ranking of 16 well-known federal agencies by popularity, click 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.