Income Tax

Income tax, as the name implies, is a government tax that a legal entity (individual or company) must pay on income earned during a fiscal year. This tax is levied based on the amount of income.

Income tax is a recurring expense for a business because it must be paid annually. It is deducted from the net profit of a business. The government collects income tax to fund public services, pay off debts, and provide goods to the general public.

There are three types of taxes, they are:

  • Individual income tax: These are taxes levied on an individual’s income such as wages, salaries, and others.
  • Business income tax: These are taxes levied on the income of corporations,
  • State and Local income tax: In the US, citizens pay federal tax irrespective of their states. In addition to that, most states and sometimes local governments impose taxes.
BznsBuilder for Programs

Write your business plans twice as fast and twice as easily!

Try BznsBuilder for free.

No credit card required, no software to install.