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Federal Income Tax

Federal income tax is a tax imposed by the U.S. government on individuals and businesses based on their earnings. The more you earn, the higher your tax rate, which is structured in brackets. This tax funds government services like defense, education, and infrastructure. Taxpayers report their income annually using forms, claiming deductions and credits to potentially lower their tax bill. Failure to pay can result in penalties. The system aims to distribute the tax burden fairly while promoting social welfare through public services. Understanding this tax is crucial for effective personal finance management.

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    Federal income tax is a tax levied by the United States government on the income earned by individuals and businesses. It is typically calculated based on a percentage of your total income, which can include wages, salaries, investments, and other revenue. The tax system is progressive, meaning higher income earners pay a larger percentage than those with lower incomes. Taxpayers file annual returns to report their income and calculate their tax owed or refund due. This revenue funds government services, programs, and infrastructure, supporting national needs such as defense, education, and healthcare.