Types of Taxes

Excise Taxes

Taxes imposed on a specific kind of good or service (e.g., motor fuel, airline tickets, tobacco)

General Sales Tax

A sales tax imposed on all retail goods.

Use Taxes

A tax that exists to prevent tax reduction from goods purchased in a state with little to no sales tax. Imposed at the same rate as the sales tax on the use, consumption, or storage of tangible property.

Value Added Tax

A variation of sales tax levied at each stage of production on the value added by the producer. One of the few taxes that is not used in the United States.

Occupational taxes

taxes that apply to specific trades or businesses. Like liquor store licenses.

Severance taxes

Taxes based on the extraction of natural resources. (e.g., oil, gas, iron ore, and coal)

Estate Tax

Taxes imposed upon the death of a person on the estate of the decedent.

Gift Tax

A Tax imposed on a living individual in regards to their will to prevent them from avoiding the estate tax.

Inheritance Tax

A Tax imposed on the value of property received by heirs from a decedent and is paid by the heirs.

Federal estate tax

Implemented with the intent of preventing large concentrations of wealth from being kept within a family for generations.

Ad Valorem Taxes

A tax imposed on the value of property. The most common one is imposed by states, counties, and cities on real estate. But it can also be used on personal property.

Taxes on realty are used exclusively by states and their local political subdivisions like cities, counties, and school districts.

Realty

Real estate.

Personalty

All property that is not attached to real estate (realty) and is movable. Examples of personalty are machinery, automobiles, clothing, household furnishings, and personal effects.

Individual Income Taxes

Vary between 10 and 37% depending on the amount of income the person receives.

Employment Taxes

An additional tax on salaries and wages paid on employees

FICA Tax

An abbreviation that stands for Federal Insurance Contributions Act, commonly referred to as the Social Security tax. The FICA tax is comprised of the Social Security tax (old age, survivors, and disability insurance) and the Medicare tax (hospital insurance) and is imposed on both employers and employees. The employer is responsible for withholding from the employee’s wages the Social Security tax at a rate of 6.2 percent on a maximum wage base and the Medicare tax at a rate of 1.45 percent (no maximum wage base). The maximum Social Security wage base for 2025 is $176,100 and for 2024 is $168,600.

Self-Employment Tax

Self-employed individuals are required to pay both the employer and the employee portion of the FICA taxes, making the SE tax rate 15.3 percent on self-employment income up to $176,100 and 2.9 percent on all additional self-employment income.

FUTA Tax

An employment tax levied on employers. Jointly administered by the Federal and state governments, the tax provides funding for unemployment benefits. FUTA applies at a rate of 6.0 percent on the first $7,000 of covered wages paid during the year for each employee. The Federal government allows a credit for FUTA paid (or allowed under a merit rating system) to the state. The credit cannot exceed 5.4 percent of the covered wages. §§ 3301–3311.

State Franchise Taxes

a tax on the privilege of doing business in a state or local jurisdiction.

Local Income Taxes

Additional Income Taxes within certain cities.