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Tax Rate

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A tax is an amount charged by an authority, generally a governmental body, for consumption, income, goods, or services. Tax rate is the percentage at which this charge is levied. The tax rate is most commonly discussed concerning income tax and sales tax. There are three major types of a tax rate: progressive, regressive, and proportional. The United States income tax system uses a progressive tax rate where the tax rate increases as the amount of income increases. A regressive tax rate can sometimes be seen in consumption taxes where the percentage of tax decreases as the amount to be taxed increases. An example of a proportional tax rate is sales tax. In this case, the tax rate remains flat no matter the amount to be taxed. The tax rate for income is governed by the federal government and will depend upon the tax bracket that an individual or business falls within. The tax rate for goods and services will depend upon the state governing the sale of those goods and services.



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