What Are the 7 Types of Taxes in America?

The seven types of taxes in America are income tax, payroll tax, sales tax, excise tax, property tax, estate and inheritance tax, and gift tax. Together they fund everything from federal defense spending to your local school district, and each one reaches a different part of your finances: what you earn, what you buy, what you own, and what you pass on. For the 2026 tax year, the top federal income tax rate stays at 37% on income above $640,600 for single filers, and the Social Security wage base rises to $184,500.

Income Tax

Income tax is the largest source of federal revenue and the tax most people think of first. It applies to wages, salaries, investment gains, rental income, and most other money flowing into your accounts during the year. The IRS collects the federal portion, and most states layer their own income tax on top. Eight states charge no state income tax at all, while top state rates elsewhere range from roughly 2.5% to over 13%.

Personal Income Tax

The federal personal income tax uses a progressive bracket system, so your first dollars are taxed at a lower rate than your last dollars. There are seven brackets for the 2026 tax year:

10% on income up to $12,400 ($24,800 for married couples filing jointly)
12% on income over $12,400 ($24,800)
22% on income over $50,400 ($100,800)
24% on income over $105,700 ($211,400)
32% on income over $201,775 ($403,550)
35% on income over $256,225 ($512,450)
37% on income over $640,600 ($768,700)

Only income above each threshold is taxed at that bracket’s rate. A single filer earning $100,000 doesn’t pay 22% on the whole amount. The first $12,400 is taxed at 10%, the next chunk at 12%, and so on up the ladder. This trips people up more than any other tax concept, and it matters because your effective rate is always lower than your top bracket.¹

Before the brackets apply, you reduce gross income by either the standard deduction or itemized deductions. The 2026 standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly.¹ If your mortgage interest, charitable contributions, state and local taxes, and medical expenses together beat that number, itemizing saves you more. Most filers take the standard deduction.

Long-term capital gains, from assets held more than a year, get preferential rates. For 2026, single filers pay 0% on gains up to $49,450 of taxable income, 15% from there up to $545,500, and 20% above that.² High earners also face a 3.8% Net Investment Income Tax on investment gains, dividends, and rental income once modified adjusted gross income exceeds $200,000 (single) or $250,000 (married filing jointly).³

You report all of this on Form 1040.⁴

Corporate Income Tax

C corporations pay a flat 21% federal tax on profits, a rate set by the Tax Cuts and Jobs Act in 2017. Before that law, the corporate rate reached as high as 35% on a graduated scale. Under the flat rate, a corporation earning $100,000 and one earning $10 million pay the same 21% on taxable income.⁵

Corporations file Form 1120 and subtract business expenses from gross revenue to reach taxable income.⁶ Most states impose their own corporate income tax, generally between 0% and about 10%. Owners of S corporations, LLCs, partnerships, and sole proprietorships usually report business profits on their personal returns instead, so the personal brackets do the work for small business income.

Payroll Tax

Payroll taxes fund Social Security and Medicare. Unlike income tax, which flows into the general fund, payroll tax revenue is earmarked for those two programs. If you’ve ever wondered why so much disappears from your paycheck before you see it, payroll tax is most of the answer.

FICA

FICA, the Federal Insurance Contributions Act, has two components. The Social Security piece is 12.4% of wages, split evenly between you and your employer at 6.2% each. For 2026, it only applies to the first $184,500 you earn. Every dollar above that is free of Social Security tax.⁷

The Medicare piece is 2.9% total, split 1.45% each. There’s no wage cap. Once your earnings pass $200,000 (single) or $250,000 (married filing jointly), you also owe an Additional Medicare Tax of 0.9% on the excess. Your employer doesn’t match that extra 0.9%.⁸⁹

Self-Employment Tax

When you work for yourself, there’s no employer to cover half the bill. You pay both halves of FICA, a combined 15.3% on net self-employment income, calculated on Schedule SE and filed with your Form 1040.¹⁰ You can deduct the employer-equivalent half when calculating your adjusted gross income. The same $184,500 Social Security wage base and $200,000 Additional Medicare Tax threshold apply.⁷

Sales Tax

Sales tax is a consumption tax charged at the register on most retail purchases, collected by state and local governments rather than the federal government. Five states impose no state sales tax at all. Where it exists, state rates typically run from about 4% to over 7% before local additions, and combined county and city rates can push the total past 10% in some areas.

Most states exempt groceries, prescription drugs, or both, though the specifics vary widely. Many states also run annual sales tax holidays that temporarily exempt items like back-to-school clothing and supplies, usually with per-item price caps.

A related concept is use tax. If you buy something from an out-of-state seller that doesn’t collect your local sales tax, you technically owe the equivalent to your state as use tax. Since a 2018 Supreme Court decision, states can require online retailers to collect sales tax even without a physical presence, and most major online marketplaces now collect and remit it automatically on behalf of third-party sellers.

Excise Tax

Excise taxes target specific products and activities rather than purchases in general. Unlike sales tax, which is added at checkout, excise taxes are usually baked into the sticker price. You pay them on gasoline, cigarettes, alcohol, airline tickets, and indoor tanning services, among other things.

The federal gasoline excise tax is 18.4 cents per gallon and hasn’t changed since 1993. State taxes add anywhere from about 9 cents to nearly 60 cents per gallon.¹¹ Federal excise on a pack of 20 cigarettes is $1.01. Beer carries a general federal rate of $18 per barrel, with reduced rates for smaller brewers. Distilled spirits are taxed at $13.50 per proof gallon at the general rate.¹²

Excise revenue is often directed to specific programs. The federal gas tax feeds the Highway Trust Fund. Some excise taxes also carry a regulatory purpose: higher rates on tobacco and alcohol are meant to discourage consumption, which is why they’re sometimes called “sin taxes.”

Property Tax

Property tax is the financial backbone of local government. Counties, municipalities, and school districts rely on it to fund public schools, fire departments, road maintenance, and similar services. It’s based on what you own rather than what you earn or spend.

Real Property Tax

Real property tax applies to land and permanent structures like homes and commercial buildings. A local assessor sets the taxable value, which may be a percentage of estimated market value. The rate is often expressed in mills, where one mill equals $1 of tax per $1,000 of assessed value.

Effective rates vary dramatically by location, and the assessment, the millage rate, and any local exemptions all shape your final bill. Most homeowners pay through an escrow account bundled with their mortgage payment. Falling behind is one of the few situations where a government entity can force the sale of your home through a tax lien or foreclosure.

Many jurisdictions offer a homestead exemption that reduces the taxable value of a primary residence, with extra reductions in some places for seniors, veterans, or people with disabilities. You typically file a one-time application with your county assessor to claim it.

Personal Property Tax

Some states also tax moveable property. The most common targets are business equipment and inventory, but a number of states extend the tax to vehicles, boats, and aircraft owned by individuals. Assessed values usually reflect depreciation, so a five-year-old car is taxed less than a new one. Businesses in these states file annual declarations listing taxable assets, which creates real compliance work that many owners underestimate.

Estate and Inheritance Taxes

Estate and inheritance taxes both apply when wealth passes from someone who has died, but they work from opposite sides of the transaction.

Estate Tax

The federal estate tax is paid by the estate of the deceased before anything is distributed to heirs. For 2026, the exemption is $15 million per individual, so estates below that owe nothing.¹³ A married couple can effectively shelter up to $30 million through portability, where the surviving spouse claims the unused portion of the deceased spouse’s exemption. The top federal rate on taxable estates is 40%.

Estates over the filing threshold file Form 706 within nine months of the date of death, with a six-month extension available if requested before the deadline.¹⁴ Smaller estates can also file Form 706 just to elect portability for the surviving spouse, even when no tax is owed.¹⁵

Inherited assets receive a step-up in basis, meaning their tax basis resets to fair market value at the date of death. If a parent bought stock for $50,000 and it was worth $500,000 at their death, the heir’s basis is $500,000, and capital gains tax applies only to appreciation after that point.¹⁶

Inheritance Tax

The inheritance tax is a state-level tax paid by the person receiving the assets, not by the estate. Only five states currently impose one. The rate typically depends on the heir’s relationship to the deceased: spouses are usually exempt entirely, children and close relatives pay the lowest rates, and unrelated beneficiaries can face rates up to 18%. State inheritance tax exemption thresholds are generally much lower than the federal estate tax exemption. There is no federal inheritance tax.

Gift Tax

The federal gift tax keeps people from sidestepping the estate tax by giving everything away before they die. The donor pays it, not the recipient. For 2026, you can give up to $19,000 per recipient per year without reporting anything to the IRS. A married couple can jointly give $38,000 to the same person.¹⁷

Gifts above the annual exclusion don’t automatically trigger tax. They require filing Form 709 by April 15 of the following year, and the excess reduces your $15 million lifetime exemption, which is shared with the estate tax exemption.¹⁴¹³ You don’t actually owe gift tax until that entire lifetime amount is used up. Payments made directly to a school for someone’s tuition or to a provider for someone’s medical bills don’t count as taxable gifts at all.

How Credits and Deductions Fit In

Knowing the seven taxes is half the picture. The other half is what reduces them. Deductions and credits both cut your bill, but they work differently.

A deduction reduces your taxable income. In the 22% bracket, a $1,000 deduction saves you $220. A credit reduces the tax you owe dollar for dollar, so a $1,000 credit saves you $1,000 regardless of your bracket. Some credits are refundable, meaning they can produce a refund even if you owe no tax.¹⁸

For 2026, the Child Tax Credit is $2,200 per qualifying child, with up to $1,700 refundable. The Earned Income Tax Credit remains available for lower-income workers, with the maximum exceeding $8,000 for families with three or more children. Taxpayers who itemize can deduct state and local taxes (the SALT deduction) up to a cap of $40,000 for most filers, raised from the $10,000 cap that applied from 2018 through 2025.

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Internal Revenue Service. Topic No. 409, Capital Gains and Losses
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Internal Revenue Service. About Form 1040, U.S. Individual Income Tax Return
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Internal Revenue Service. About Form 1120, U.S. Corporation Income Tax Return
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Internal Revenue Service. IRS Form 1120 – U.S. Corporation Income Tax Return
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Social Security Administration. Contribution and Benefit Base
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Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates
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Internal Revenue Service. Topic No. 560, Additional Medicare Tax
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Internal Revenue Service. About Schedule SE (Form 1040), Self-Employment Tax
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U.S. Energy Information Administration. How Much Tax Do We Pay on a Gallon of Gasoline and on a Gallon of Diesel Fuel?
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Alcohol and Tobacco Tax and Trade Bureau. Tax Rates
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Internal Revenue Service. Gifts and Inheritances
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Internal Revenue Service. Credits and Deductions