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Federal Tax


Federal Tax

Federal Taxes are administered through the Internal Revenue Service (IRS), a bureau of the Treasury. The US tax code is intended to provide revenue for the federal government. Federal taxes are also for public policy reasons, such as encouraging home ownership.

About Federal Tax

The Federal tax law is administered primarily by the Internal Revenue Service, a bureau of the Treasury. The U.S. tax code is known as the Internal Revenue Code of 1986 (title 26).

U.S. income tax is progressive, usually meaning that the higher a persons level of income, the greater the percentage of taxes they need to pay. The amount of taxes owed can also be influenced by marriage, children, home ownership and many other factors.

The federal government collects several other taxes in addition to the general income tax. Social Security and Medicare are funded by taxes on personal earned income. Estate taxes are levied against inheritances. There are also long-term capital gains as well as certain types of qualified dividend income which are taxed.

Federal excise taxes are applied to specific items such as motor fuels, tires, telephone usage, tobacco products, and alcoholic beverages. Excise taxes are often, but not always, allocated to special funds related to the object or activity taxed.

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