{"id":57404,"date":"2021-06-15T13:52:14","date_gmt":"2021-06-15T18:52:14","guid":{"rendered":"https:\/\/www.hrblock.com\/tax-center\/?p=57404"},"modified":"2024-05-01T15:20:49","modified_gmt":"2024-05-01T20:20:49","slug":"tax-definitions","status":"publish","type":"post","link":"https:\/\/www.hrblock.com\/tax-center\/filing\/tax-preparation-and-services\/tax-definitions\/","title":{"rendered":"What is tax? Learn about key tax definitions"},"content":{"rendered":"\n<p>Taxes are prevalent around the world, but each country has various methods, rates, and tax laws. <a href=\"https:\/\/www.hrblock.com\/tax-center\/irs\/tax-brackets-and-rates\/highest-lowest-taxed-states\/\">State to state<\/a>, county and even local taxes differ within the United States.<\/p>\n\n\n\n<p>This post will cover the answer to the question, \u201cWhat is tax?\u201d as well as the different types of tax that exist: including income, property, and sales tax definitions.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-does-tax-mean\">What does tax mean?<\/h2>\n\n\n\n<p>First, let\u2019s explore the answer to \u201cWhat is taxation?\u201d Generally speaking, taxes are how we all chip in to finance our local, state or federal government. Taxes are used for the betterment of society.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"alignright size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"240\" height=\"160\" src=\"https:\/\/www.hrblock.com\/tax-center\/wp-content\/uploads\/2021\/06\/tax-definitions.jpg\" alt=\"tax definitions\" class=\"wp-image-57424\"\/><\/figure><\/div>\n\n\n<p>Individuals, estates, trusts, and businesses pay tax to operate functions like defense programs, transportation, infrastructure, social services, income assistance, interest on debt, first responders, public schools and colleges, public libraries, science research, and healthcare programs.<\/p>\n\n\n\n<p>Generally, taxes are divided into two categories:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Direct tax<\/strong>, which is paid directly by the public to a government entity. (This includes income, estate, and property tax)<\/li>\n\n\n\n<li><strong>Indirect tax<\/strong>, which is inadvertently paid by the public to a government entity. (This includes central excise duty, customs duties, service tax, and value-added tax.) <\/li>\n\n\n\n<li><em>*  Sales tax can be direct or indirect.<\/em><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-types-of-taxes\">Types of taxes<\/h2>\n\n\n\n<p>We brushed upon this previously, but there are multiple types of taxes individual taxpayers or entities pay. Some of the most common ones are property, sales, and income tax. Let\u2019s explore each in greater detail:<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-property-tax-definition\">Property tax definition<\/h2>\n\n\n\n<p>Property tax is tax paid by the owner of real estate or personal property. It\u2019s determined by the value of the property. The piece of property is generally assessed by a local government entity to determine how much it\u2019s worth and how it should be taxed.<\/p>\n\n\n\n<p><a href=\"https:\/\/www.hrblock.com\/tax-center\/income\/real-estate\/real-estate-taxes-vs-property-taxes\/\">Property taxes<\/a> are a primary source of income for city, county, and state governments. While property owners see property tax as a financial burden, it\u2019s lessened by the fact that you can deduct them from your income taxes. Learn more about <a href=\"https:\/\/www.hrblock.com\/tax-center\/filing\/adjustments-and-deductions\/deducting-property-taxes\/\">deducting property taxes<\/a> from your income taxes.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-sales-tax-definition\">Sales tax definition<\/h2>\n\n\n\n<p>Sales tax is a tax imposed by the government on goods or services. Generally, the consumer is responsible for paying sales tax at the point of sale \u2013 and the business is responsible for reporting sales tax. <a href=\"https:\/\/www.hrblock.com\/tax-center\/filing\/states\/sales-tax-by-state-2\/\">Sales tax is imposed in most states <\/a>\u2013 but not all. States within the U.S. establish what types of goods and services are taxed \u2013 and how much. Sales tax is not set at a graduated rate \u2013 it\u2019s usually a flat rate.<\/p>\n\n\n\n<p>Learn more about how you can <a href=\"https:\/\/www.hrblock.com\/tax-center\/filing\/adjustments-and-deductions\/deduct-state-sales-tax\/\">deduct state sales tax<\/a> from your income taxes.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-income-tax-definition\">Income tax definition<\/h2>\n\n\n\n<p>Income tax is a tax levied on income you receive in a tax year. <a href=\"https:\/\/www.hrblock.com\/tax-center\/income\/other-income\/income-tax\/\">Federal income tax <\/a>in the U.S. is a \u201cprogressive\u201d tax paid at a marginal&nbsp;<a href=\"https:\/\/www.hrblock.com\/tax-center\/irs\/tax-brackets-and-rates\/what-are-the-tax-brackets\/\">tax rate<\/a>. So, the income you receive in a tax year is taxed at different bracketed rates. Learn more about filing a <a href=\"https:\/\/www.hrblock.com\/tax-center\/irs\/refunds-and-payments\/federal-tax-return\/\">federal tax return<\/a> and common <a href=\"https:\/\/www.hrblock.com\/tax-center\/irs\/deadlines-and-extensions\/tax-deadlines\/\">tax deadlines<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-still-questioning-what-is-taxation-let-us-help\">Still questioning \u201cWhat is taxation?\u201d \u2013 Let us help<\/h2>\n\n\n\n<p>Taxation can be a complex topic. Luckily, we\u2019re here to help. Our H&amp;R Block tax pros know the ins and outs of federal and state income taxes and are dedicated to helping you not only better understand your tax return, but also are committed to finding every tax break you\u2019re entitled to.<\/p>\n\n\n\n<p>Note: While we can help you deduct property taxes and sales taxes on your federal and state income tax return, we do not engage in services to help you pay those types of taxes.<\/p>\n\n\n\n<p><a href=\"https:\/\/www.hrblock.com\/tax-offices\/local-offices\/\">Make an appointment<\/a> today.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Taxes are prevalent around the world, but each country has various methods, rates, and tax laws. State to state, county and even local taxes differ within the United States. This post will cover the answer to the question, \u201cWhat is tax?\u201d as well as the different types of tax that exist: including income, property, and [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":57423,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[42,125],"tags":[],"class_list":["post-57404","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tax-preparation-and-services","category-filing"],"acf":[],"yoast_head":"<title>Common Tax Definitions | H&amp;R Block<\/title>\n<meta name=\"description\" content=\"From income tax to sales and property tax, it\u2019s important to understand key tax definitions so you know what you owe and why you owe it. 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