What are the Different Types of Taxes?

Death taxes

A death tax is a tax on the right to transfer property or to receive property upon death of the owner. Death tax is an excise tax. When the death tax is imposed on the right to pass property at death, it is considered an estate tax whereas when death tax imposed on the right to receive property from a decedent, it is considered an inheritance tax.

• Federal Estate Tax

The Federal Estate tax was part of the Revenue Act of 1916.

• State Death Tax

Most states levy an inheritance tax, an estate tax or both.

Gift taxes

Gift tax is an excise tax levied on the right to transfer property.

• Federal Gift Tax

The Federal Gift Tax was first enacted in 1932 and was intended to complement the estate tax. Only taxable gifts are subject to the federal gift tax.

• State Gift Tax

Only a few states now have state gift tax such as Connecticut, Louisiana, North Carolina, and Tennessee.

Income taxes

Income taxes are levied by the Federal government, most states, and some local governments. Individuals, corporations and certain fiduciaries have to pay income taxes.

• Federal Income Taxes

This is the most important type of tax to understand. The federal income tax is levied on individuals as well as corporations and businesses.

• State Income Taxes

Most states levy income taxes except Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. Some other states may have income taxes on some types of income only.

• Local Income Taxes

Some cities also impose their own income taxes such as Baltimore, Cincinnati, Cleveland, Detroit, Kansas City (Missouri), New York, Philadelphia, St. Louis.

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