DRAFT: This module has unpublished changes.
Types of Taxes
Taxes on Purchases
- State and local sales taxes are added to the purchase price of products.
- An excise tax is imposed on specific goods and services, such as gasoline, cigarettes, alcoholic beverages, tires, air travel, and telephone service.
Taxes on Property
- The real estate property tax is based on the value of land and buildings.
- Personal property taxes on the value of automobiles, boats, furniture, and farm equipment are imposed in some areas
Taxes on Wealth
- An estate tax is imposed on the value of an individual’s property at the time of his or her death.
- An inheritance tax is levied on the value of property bequeathed by a deceased individual.
- Gift amounts greater than $13,000 are subject to federal tax.
Taxes on Earnings
- Social Security taxes are used to finance the retirement, disability, and life insurance benefits of the federal government’s social security program.
- Income tax is the major financial planning aspect of taxes for most individuals. In addition to federal income tax, all but seven states also have a state income tax.