There are two main ways for governments to collect taxes. One is by taxing income directly. This is known as an income tax. The other is taxing only income that is spent.
Currently, some types of income are either taxed at lower rates than ordinary income or are exempt from taxation to some degree.
In general, only cash income is subject to the income tax.
Tax credits and deductions are two ways to reduce tax liability. Tax credits directly reduce the amount of taxes owed, dollar-for-dollar.
The federal estate taxA tax based on the value of the estate of someone
State and local governments issue bonds to finance important projects that meet social goals and benefit communities.
Grandparents and other relatives play an important caregiving role in family well-being. Support from extended family is especially vital in families with low incomes.
PovertyThe federal government defines “poverty” as income below specific thresholds.
Federal and state programs help many older people with low incomes. These programs provide access to vital services like income support and health care.