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Economics vocabulary · Fiscal Policy and Public Finance

Income tax

Meaning in economics, with examples

nounCore term

In economics, income tax means: A tax that people pay on the money they earn from work, savings, rent and other sources, usually taken directly from wages.

In Turkish: gelir vergisi

How it is used

A direct tax, usually progressive, with different rates for different income bands or brackets. People pay income tax; governments raise or cut it; employers withhold it from salaries. Companies pay corporate tax (UK: corporation tax) instead.

Example sentences

  1. Workers in the top bracket pay income tax at the highest rate.

  2. The government plans to cut income tax for low earners next year.

Common collocations

  • pay income tax
  • income tax bracket
  • income tax rate
  • cut income tax
  • income tax return
  • taxationThe system by which a government collects money from people and businesses through taxes on income, profits, spending and property.
  • progressive taxA tax that takes a larger share of income from people who earn more, usually through higher rates on higher income brackets.
  • tax revenueThe money a government collects from taxes on income, profits, sales, property and other things during a given period.
  • VATShort for value-added tax: a tax on spending that is added to the price of most goods and services at each stage of production and is finally paid by the consumer.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Fiscal Policy and Public Finance

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This page explains English vocabulary for learners. It is not financial advice.