Federal taxes are taxes imposed by the United States federal government on income, earnings, and certain transactions. The most common federal tax is the federal income tax, which is levied by the Internal Revenue Service (IRS) on the annual earnings of individuals, corporations, trusts, and other entities. This tax applies to all forms of income including wages, salaries, commissions, bonuses, investment income, and some unearned income like interest and dividends
. Federal income tax rates are progressive, meaning higher income levels are taxed at higher rates. For 2024 and 2025, tax rates range from 10% to 37%, applied across seven tax brackets depending on filing status and income level
. The revenue from federal taxes funds a wide array of government programs and services, including:
- Infrastructure development and maintenance
- Education programs
- Public safety and national defense
- Social welfare programs such as Social Security and Medicare
- Health programs including Medicaid and CHIP
- Disaster relief and emergency services
- Scientific research and space exploration
- Pensions and benefits for government employees
Federal taxes are collected primarily through withholding from paychecks or estimated tax payments, and taxpayers report their income and calculate taxes owed using IRS forms such as Form 1040
. In summary, federal taxes are mandatory payments to the U.S. government based mainly on income, used to finance the operations and services of the federal government across many sectors
