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Tax
Definition
A tax is a mandatory financial charge imposed by the government on individuals and businesses to fund public services and infrastructure.
Explanation
Types of taxes include income tax (federal, state/local), payroll tax (Social Security, Medicare), property tax, sales tax, and capital gains tax. Tax rates can be progressive (higher income = higher rate) or flat. Understanding tax brackets helps with financial planning.
Tax planning strategies include contributing to retirement accounts, claiming deductions and credits, and timing capital gains. Professional tax advice is recommended for complex situations.
Example
Someone in the 22% tax bracket earning $60,000 pays $13,200 in federal income tax, plus Social Security and Medicare, totaling about $18,300.