Taxes in the United States are levied against businesses and individuals at the Federal, State, and local levels. The mix of taxes collected varies with the level of government and type of taxpayer.

The taxes that individuals pay fall into three categories. Income-based taxes are the majority of individual taxes. Consumption-based taxes are the next biggest category. The smallest category is asset-based taxes.

Income taxes are split into several categories. At the federal level, the basic income tax is intended to provide the funds the government needs to operate. This tax is intended to be a progressive tax. That is, it is supposed to collect a higher percentage of money from businesses and individuals that make more money.

There are also income taxes called FICA taxes. These taxes are collected on salaries paid to employees, but are paid equally by the business and the individual. FICA taxes consist of withholdings for Social Security and for Medicare.

Similar to FICA taxes, but with different limits set is the FUTA tax. FUTA is a tax levied to pay for government-run unemployment insurance. FUTA is not collected from individuals, but is paid entirely by businesses.

Governments have activities which they encourage by offering tax deductions and tax credits. To prevent corporations and individuals from eliminating their tax liability, the AMT Alternative Minimum Tax was developed. The AMT is a flat 20% tax rate with significantly fewer deductions and credits. Any individual or business that has a higher tax liability under AMT must pay the AMT tax instead of the basic income tax.

Consumption-based taxes are one of the primary means that states raise revenue in addition to the income tax. Most of this is done through a sales tax. The idea behind these taxes is that they collect more from people that can afford more. How they work is that people choose to consume most products. Some states exempt groceries from these sales taxes, while other give a tax credit or rebate. Still, sales taxes tend to be a regressive tax as the percentage of a person's income that gets spent on goods tends to go down as incomes go up.

Additional examples of consumption taxes are the gasoline taxes, tobacco taxes and alcohol taxes. One that travelers see regularly is a lodging or occupancy tax. Lodging taxes are generally rigorously defined so that it is the transient lodgings which are taxed and not longer term living locations. This tax

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