The main taxes levied in the United States are income tax, payroll tax, sales tax, property tax, taxes on imports, gift taxes, and estate taxes. All licenses and federally-required professional credentials are also a form of tax. Taxes are levied at the federal, state, county, and municipal levels, and are imposed on corporations and residents of the United States. Even illegal immigrants pay U.S. taxes. In 2010, the total of all U.S. taxes came to 24.8% of GDP.
Income tax
Income tax is calculated as a percentage of total worldwide income at the federal and state levels. Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming do not have a state income tax. New Hampshire and Tenessee do not tax earned income, but do tax interest and dividend income.
The rate of income tax is based on income tiers. The total income for this purpose may be reduced through allowable deductions. Taxes paid to the state count as deductions for the purpose of calculating taxes owing to the federal government.
No other country taxes its nonresident citizens on worldwide income at the same rates as domestic income. If a tax treaty exists, a tax credit may be allowed when income tax has previously been paid to a foreign country.
Income tax is collected directly from each pay stub. Any outstanding difference or refund is calculated once a year, or in some cases quarterly. Businesses, including the self-employed, do not have tax deductions from each pay stub, so they calculate and pay the entire amount annually or quarterly.
Payroll tax
Most payroll taxes are calculated as a percentage on total wages. Social Security income tax is calculated only on the first $106,800 of total wages.
These taxes are levied at the federal and state level. They are used to cover the costs of Medicare and Social Security, including unemployment and retirement benefits.
Sales tax
Sales tax is calculated as a percentage of the retail value of most goods and services at the state, county, and municipal levels. Alaska, Delaware, Montana, New Hampshire, and Oregon do not levy state sales tax. There is no federal sales tax in the U.S.
Sales tax is collected by the seller at the point of sale. A deduction for a percentage of sales tax may be allowed for income tax purposes.
Property tax
Property taxes is calculated as a percentage of the fair market value of property. It is usually assessed by local governments. Some states, such as Nevada, offer considerable relief from local property taxes.
In some cases, the costs of elementary and secondary education as well as other services are included under property taxes. However, in most cases, they are levied separately. These taxes are paid once a year or quarterly.
Taxes on imports
Tariffs and customs duties are calculated as a percentage of the goods brought over the border. Some goods may be duty-free, depending on the country of origin. All taxes on imports are levied at the federal level.
These taxes are paid at the border crossing. For shipped goods, the duty may be paid at the border by the shipping company, or at a local customs office.
Estate and gift taxes
Gift taxes are levied on the receipt of donations. Estate taxes are levied upon inheritance. Both are assessed at the federal level. Some states may also levy estate or gift taxes.
Both gift and estate taxes are calculated as a percentage of the gift or estate. For in-kind gifts or inheritances, the fair market value is used.
As with income tax, federal estate and gift taxes are calculated based on worldwide gifts or inheritances. If a tax treaty exists, a tax credit may be allowed when income tax has previously been paid to a foreign country.
Estate taxes are paid before the estate is transferred to the heirs. Gift taxes may be paid upon receipt, or the gift may be declared under income.