United States

The United States uses a progressive federal income tax system with seven tax brackets, ranging from 10% to 37% for the 2025 tax year. Taxable income thresholds differ based on filing status: single, married filing jointly, married filing separately, and head of household. The standard deduction for single filers is $15,000, and $30,000 for married couples filing jointly. In addition to federal income tax, most states impose their own income taxes. State income tax rates vary dramatically: nine states (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming) have no state income tax, while California's top rate reaches 13.3%. Some cities, notably New York City, also levy local income taxes. Social Security and Medicare taxes, collectively called FICA, are shared between employer and employee. The employee pays 6.2% for Social Security on earnings up to $176,100 (2025 cap) and 1.45% for Medicare on all earnings, with an additional 0.9% Medicare surcharge on earnings above $200,000. Employers match the base Social Security and Medicare rates. The US tax system offers numerous deductions and credits. Common deductions include mortgage interest, state and local taxes (capped at $10,000), charitable contributions, and retirement plan contributions. The 401(k) allows employees to defer up to $23,500 in pre-tax income (2025), with an additional $7,500 catch-up contribution for those over 50. Traditional IRA contributions may also be tax-deductible. Tax credits directly reduce tax liability and are often more valuable than deductions. Key credits include the Child Tax Credit ($2,000 per qualifying child), Earned Income Tax Credit for lower-income workers, and various education credits. Capital gains are taxed at preferential rates: 0%, 15%, or 20% for long-term gains depending on income, plus a 3.8% Net Investment Income Tax for higher earners. The US has an extensive network of double taxation treaties with over 60 countries. American citizens and permanent residents are subject to worldwide taxation regardless of where they live, though the Foreign Earned Income Exclusion allows qualifying expatriates to exclude up to $130,000 of foreign earnings. The corporate tax rate is a flat 21%, established by the Tax Cuts and Jobs Act of 2017.