3 Different Taxes That You Should Know About

You may understand what a tax is, but you might not be familiar with the different kinds. The deeper you look into each term, the more complicated it can become without the right explanation. Don’t worry! You can start clearing up any confusion right now. From income to progressive taxes, we can help you catch up on several critical terms before the next Tax Day. We’ll explain three different taxes you should know about, so keep reading to learn how to navigate tax information with more clarity.

Income Tax

One of the most important terms to know around Tax Day is income tax. This tax affects your yearly income. When Tax Day arrives, the government taxes your income. It’s as simple as that. Although this tax affects U.S. citizens, you may still have to pay if you live outside of the United States. For instance, our team offers personal tax preparation to expatriates who need assistance while living overseas.

Progressive Tax

Progressive tax pertains directly to your income taxes. Simply put, progressive tax means that the higher your income is, the higher your tax rate will be. This is how most income taxes function, but don’t hesitate to speak with your CPA if you’re unsure how this affects your current income. If you want to know more about tax brackets, then progressive tax is one of the most important phrases to know. We have one more tax type to assess.

Regressive Tax

Another tax that you should know about is a regressive tax. Think of this as the opposite of a progressive tax. When dealing with the regressive style, wealthier individuals experience lower tax rates. That said, flat taxes can also be considered regressive. Payroll taxes are among the most common forms of regressive taxes. Thanks to the guide above, you can navigate the data more clearly, whether you’re dealing with progressive or regressive taxes.