Finance
What is Income tax?
Income tax is a tax governments charge on the money people and businesses earn. It funds public services like roads, schools, and healthcare, and usually rises with how much you earn.
See it, don’t just read it.
Watch a 2-minute lesson with voice + animation that explains income tax.
Key things to understand
- 1You pay a percentage of your income to the government.
- 2Most systems are 'progressive' — higher earners pay a higher rate.
- 3Deductions and exemptions lower the taxable amount.
- 4It funds public services and infrastructure.
Frequently asked questions
- How is income tax calculated?
- Generally by applying tax rates to your taxable income (income minus allowed deductions), often in rising brackets.
- What is a tax bracket?
- A range of income taxed at a particular rate; income above each threshold is taxed at the higher rate.
- What are tax deductions?
- Expenses or allowances you can subtract from income to reduce the amount that's taxed.