Tax in the United States: sales tax, income tax, company tax, capital gains

Sales Tax in United States

Single-stage retail sales tax — collected once at the final sale, with no value-added input-credit chain.

Standard rate

No national rate (state and local vary)

Local name

Sales Tax — State & Local Sales Tax

Type

Sales Tax

Reduced rates

None on record

Registration threshold

Varies by state (economic nexus)

Filing

Varies by state

Authority

State & local tax authorities

Current rate since

1 January 2000

Company tax in United States

The headline corporate income tax rate is 21%. In effect since 1 January 2018.

Flat 21% federal rate. Most states levy an additional corporate income tax (0%–~12%) not included here.

United States company tax calculator →

Did you know? United States tax facts

• The US is the only OECD economy without a national VAT or GST — consumption is taxed entirely by state and local sales taxes across thousands of separate jurisdictions.

  Congress repeatedly debated a national sales tax (and later a VAT) but never adopted one, leaving general consumption taxation to the states from the 1930s onward.

  Source: OECD Consumption Tax Trends — United States ↗

• In 1932 the US House nearly passed a federal sales tax, but a rank-and-file 'Sales Tax Rebellion' killed it — Congress instead enacted a slew of excise taxes on luxuries like furs, jewelry, yachts and safety deposit boxes.

  With Depression revenues collapsing, Democratic leaders backed a manufacturers' sales tax that was defeated by a backbench revolt; lawmakers fell back on narrow excise levies plus higher income and estate rates, permanently steering the US away from a national consumption tax.

  Source: Tax History Project / Tax Notes — The Republican Roots of New Deal Tax Policy ↗

• Mississippi launched America's first statewide general sales tax in 1932 at 2% — Governor Mike Conner actually wanted 3 cents on the dollar but the legislature cut him to 2.

  Conner pushed an Emergency Revenue Act to ease a roughly $13 million Depression deficit; the 2% tax took effect May 1, 1932, and has since grown to Mississippi's 7% rate.

  Source: Magnolia Tribune ↗

• Whether a candy bar is taxable can hinge on whether it contains flour: in many states a Twix or Kit Kat is tax-free 'food' while a Snickers or Milky Way is taxable 'candy.'

  The Streamlined Sales Tax definition (adopted by ~24 states in 2002) excludes anything listing flour as an ingredient from 'candy,' so wafer/cookie bars like Twix and Kit Kat escape candy tax while pure chocolate-and-nut bars like Snickers don't.

  Source: PBS NewsHour ↗

• America's first income tax was a Civil War measure: Congress enacted a flat 3% on incomes over $800 in 1861 to pay for the war, later made graduated, and repealed it in 1872.

  The National Archives: 'to help pay for the Civil War, Congress enacted the first American income tax', 'a flat 3% on incomes over $800'; it 'was later made graduated' and repealed in 1872. An 1894 attempt — 2% on incomes over $4,000 — was struck down by the Supreme Court in a 5–4 decision.

  Source: U.S. National Archives — 16th Amendment to the U.S. Constitution · checked 10 October 2026 ↗

• The modern federal income tax needed a constitutional amendment: the 16th Amendment passed Congress on 2 July 1909 and was ratified on 3 February 1913, letting Congress tax incomes without apportioning among the states.

  The National Archives: 'Passed by Congress July 2, 1909. Ratified February 3, 1913'; the text gives Congress 'the power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration'.

  Source: U.S. National Archives — 16th Amendment to the U.S. Constitution · checked 10 October 2026 ↗

• In 1913 the top US income tax rate was 7%, on incomes over $500,000. By 1944–45 it had reached an all-time high of 94% on income above $200,000.

  Wikipedia's history of top rates: 'the top tax rate was 7% on incomes above $500,000' in 1913; 77% in 1918; 94% on income above $200,000 in 1944–45, 'its all-time high'; 92% in 1952–53; 50% for 1982–86; 28% in 1988–90; and 37% since the 2017 Tax Cuts and Jobs Act.

  Source: Wikipedia — Income tax in the United States · checked 10 October 2026 ↗

• 'Tax Day' has moved twice: the first federal returns in 1913 were due 1 March, then 15 March from 1918, and 15 April since 1955 — unless it falls on a weekend or on Washington DC's Emancipation Day holiday.

  Wikipedia: the deadline 'for individuals was March 1 in 1913', 'was changed to March 15 in 1918 and again to April 15 in 1955'; when it 'conflicts with a weekend or public holiday such as Emancipation Day' the due date moves to the next business day.

  Source: Wikipedia — Tax Day · checked 10 October 2026 ↗

• The 401(k) is named for a subsection of the tax code added by the Revenue Act of 1978; benefits consultant Ted Benna was among the first to build a plan on it — at his own employer, the Johnson Companies.

  Wikipedia: Congress enacted 'Internal Revenue Code Section 401(k) as part of the Revenue Act' signed on 6 November 1978; Benna 'was among the first to establish a 401(k) plan, creating it at his own employer, the Johnson Companies'. The employee deferral limit is $23,500 for 2025 and $24,500 for 2026.

  Source: Wikipedia — 401(k) · checked 10 October 2026 ↗

• Every US paycheck carries two flat payroll taxes: 6.2% for Social Security, matched by the employer, up to a wage base of $184,500 in 2026 — and 1.45% for Medicare with no ceiling at all.

  IRS Topic 751: 'The current tax rate for Social Security is 6.2% for the employer and 6.2% for the employee, or 12.4% total'; 'The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total'; 'For earnings in 2026, this base limit is $184,500'; 'There's no wage base limit for Medicare tax'; employers also withhold a 0.9% Additional Medicare Tax on wages above $200,000.

  Source: IRS — Topic no. 751, Social Security and Medicare withholding rates · checked 10 October 2026 ↗

• The US taxes capital gains by patience: sell within a year and the gain is taxed like wages; hold longer and most people pay 0%, 15% or 20% — though collectibles such as coins and art are capped at 28%.

  IRS Topic 409 (tax year 2025): 'if you hold it one year or less, your capital gain or loss is short-term'; long-term gains are 0% up to $48,350 of taxable income (single), 15% up to $533,400 and 20% above; 'Net capital gains from selling collectibles (such as coins or art) are taxed at a maximum 28% rate'; net capital losses can offset only $3,000 of other income a year ($1,500 if married filing separately).

  Source: IRS — Topic no. 409, Capital gains and losses · checked 10 October 2026 ↗

• A US citizen living abroad still files a US return: the IRS taxes 'worldwide income from all sources' regardless of where you live — though expats get an automatic filing extension to 15 June.

  IRS: 'You are subject to tax on worldwide income from all sources'; for citizens and resident aliens living overseas 'the automatic extended due date would be June 15', two months after the regular 15 April deadline. The foreign earned income exclusion is among the special benefits available.

  Source: IRS — U.S. citizens and resident aliens abroad · checked 10 October 2026 ↗

• The 2017 Tax Cuts and Jobs Act replaced a graduated corporate income tax of 15% to 35% with a flat 21% from 2018 — the top rate had been 35% since 1993, and peaked at 53% in 1942.

  Wikipedia: the flat 21% rate took effect for tax years beginning after 31 December 2017, 'replacing a graduated structure ranging from 15% to 35%'; the top corporate rate 'fell from a high of 53% in 1942 to 38% in 1993', and corporations in the top bracket paid 35% from 1993 to 2017.

  Source: Wikipedia — Corporate tax in the United States · checked 10 October 2026 ↗

More stories, for every country that has one, on the tax facts page.