Income tax

Income tax is a government levy on income earned by individuals, businesses, or other entities. Its rules determine which income is taxable, how it is measured, and what rates apply.

Taxable income: Income remaining subject to tax after legally permitted exclusions, deductions, and adjustments. It is the base to which income-tax rates are applied.
Income: Money or other economic gains received by a person or organization. Income tax begins by defining which gains count as income.
Consumption tax: A tax imposed on spending or transactions involving goods and services. It taxes expenditure rather than income as it is earned.
Tax incidence: The distribution of a tax's economic burden among the people affected by it. The person legally liable may not bear the full economic cost of income tax.
Income tax in the United Kingdom: The system of income taxation developed in the United Kingdom, first introduced in 1799. Britain's early modern income tax became a model for later state revenue systems.
Progressive tax: A tax whose average rate rises as the tax base increases. Progressive rate schedules make higher portions of income face higher rates.
Tax: A compulsory payment imposed by a government to fund public purposes. Income tax is one form of government taxation.
Value-added tax: A consumption tax collected at stages of production and distribution on value added. Unlike income tax, it is collected through transactions in goods and services.
Deadweight loss: A loss of economic surplus caused when a policy distorts otherwise beneficial choices. Income taxes can alter work and investment decisions, reducing total surplus.
Sixteenth Amendment to the United States Constitution: The 1913 amendment authorizing the United States Congress to tax incomes without apportionment among states. It established the constitutional basis for a permanent federal income tax in the United States.

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