Tax in USA – Types of taxes

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USA has a number of taxes. Besides the broad classification at the government level, if we look at the types , we come across the following types of taxes:

  • Payroll Tax
  • Property Tax
  • Sales Tax
  • Tariff & Custom Duty
  • Estate & Gift Tax

Payroll Tax

  • Payroll Tax is imposed by the federal and all state governments. It includes Social Security and Medicare taxes imposed on both employers and employees.
  • Employers are required to withhold income taxes on wages. An unemployment tax and certain other levies apply to employers.

Property Tax

  • Property tax is imposed by most local governments and many special purpose authorities based on the fair market value of property.
  • School and other authorities are often separately governed, and impose separate taxes.
  • Property tax is generally imposed only on realty, though some jurisdictions tax some forms of business property.

Sales Tax

  • Sales tax is imposed by most states and some localities on the price at retail sale of many goods and some services.
  • Sales tax rates vary widely among jurisdictions, from 0% to 16%, and may vary within a jurisdiction based on the particular goods or services taxed.
  • Sales tax is collected by the seller at the time of sale, or remitted as use tax by buyers of taxable items who did not pay sales tax.

Tariff & Custom Duty

  • Tariff or custom duties are applicable on the import of goods from various jurisdictions
  • These tariffs or duties must be paid before the goods can be legally imported
  • Rates of duty vary from 0% to more than 20%, based on the particular goods and country of origin

Estate & Gift Tax

  • Estate and gift tax is imposed by the federal and some state governments on the transfer of property inheritance, by will, or by lifetime donation
  • Similar to federal income taxes, federal estate and gift taxes are imposed on worldwide property of citizens and residents and allow a credit for foreign taxes

(Source: Wikipedia.org)

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