As one of the world’s largest economies, the United States has a unique tax system in the international arena. Whether it is a company or an individual, if you want to do business in the United States, it is a vital step to have a deep understanding of its tax system and tax rates. This article will introduce the US tax system in depth to help you navigate the US business activities with ease.
1. Complex and diverse US tax system.
The US tax system is divided into two main parts: federal tax and state tax. Federal taxes are levied by the central government, mainly including personal income tax, corporate income tax, estate tax and gift tax. State governments levy state taxes according to their own needs, including state income tax, sales tax and property tax.
One of the characteristics of the US tax system is the diversity of tax types, and different tax types have different scopes and calculation methods. In addition, the US tax rate is generally high and the tax law is quite complicated. In such an environment, it is particularly important to understand tax relief and preferential policies, but these policies often require professional tax consultants to help companies or individuals make reasonable plans and applications.
2. Explore various US tax rates.
1. Personal income tax.
The individual income tax in the United States adopts a progressive tax rate system, which is divided into seven levels, with tax rates of 10%, 12%, 22%, 24%, 32%, 35% and 37% respectively. The tax rate of individual income tax is determined by the individual’s income level. The higher the income, the higher the tax rate.
2. Corporate income tax.
The corporate income tax rate in the United States was adjusted to 21% after the 2017 tax reform bill, which is a significant reduction from the previous 35%. This reform has attracted more companies to invest and conduct business in the United States, providing a boost to the growth of the US economy.
3. Gift tax and estate tax.
The gift tax and estate tax in the United States are also levied at progressive tax rates, divided into three levels of 18%, 20% and 40% respectively. Gift tax is for property given by individuals to others, while estate tax is for property left behind after an individual dies.
4. Sales tax.
The sales tax in the United States varies from state to state, with an average tax rate of about 7.25%. In addition, some states will impose additional sales taxes on certain goods, such as cars, tobacco and alcoholic beverages.
5. Property tax.
Property taxes in the United States are levied by state governments, and the tax rates and collection methods vary from region to region. Generally, property taxes are calculated based on the market value of the property, and the tax rate ranges from 0.2% to 2%.
3. Interpretation of the current situation of US taxation.
The amount of tax in the United States depends on the income level of individuals or companies and the tax rate of the state in which they are located. Personal income tax is determined by income level, and the tax rate is linked to income. For companies, the 21% corporate income tax rate has been significantly reduced from the previous 35%, which reduces the tax burden of companies.
In addition to federal and state taxes, there are other taxes in the United States, such as social security taxes, medical insurance taxes and unemployment insurance taxes. The tax rates and collection methods of these taxes also vary according to specific circumstances. Be sure to plan and declare them reasonably according to your personal circumstances.
In short, understanding the US tax system and tax rates is crucial for companies or individuals doing business in the United States. If you plan to register a company, conduct financial activities, conduct tax audits, or apply for trademarks in the United States, it is strongly recommended that you consult a professional tax advisor to ensure business compliance and obtain the maximum tax benefits.