Income Tax

Income tax is a financial charge imposed by governments on individuals or entities based on their income or profits. The tax is usually calculated as a percentage of the taxpayer’s earnings, which can include wages, salaries, dividends, interest, and other forms of income. Income tax serves as a primary source of revenue for governments, funding public services such as education, healthcare, and infrastructure.

Tax systems vary widely across different countries and jurisdictions, including progressive tax structures where rates increase with higher income levels, or flat tax systems where a single rate applies to all taxable income. Taxpayers are typically required to file annual returns, reporting their income and calculating their tax liabilities. Deductions, credits, and exemptions may also apply, reducing the overall tax burden.

Income tax policies and rates can significantly influence economic behavior, investment decisions, and overall economic growth, making it a crucial aspect of fiscal policy.