Cities and Towns in the United States > Employment > We Help You Understand the Income Tax System in the USA


Income taxes in the US depend on where you live, but mostly on the state you belong to.

So, in fact, from one family to another with the same income level, some will pay more taxes than others.

Depending on where you live, you may have to file and pay the following income taxes:

  • - Federal (mandatory)

  • - State taxes (they depend on the State)

  • - Or even city or community taxes (depending on the city where you live)

Let's have a look at how to file your tax return, how the system works, and some of the vocabulary you'll need to familiarize yourself with taxes.

Understand the income taxes system in the USA


When you are going to declare your taxes, you will discover some words or expressions that you do not know. We will explain them to you in the simplest way possible:

• Adjusted Gross Income (AGI):

This is your gross income that has been reduced by certain adjustments. Removing the deductions and allowances from AGI gives you your taxable income. AGI is also used to determine your eligibility for certain tax benefits.

• Child Tax Credit

Deduction granted to the taxpayer for each supported child under the age of 17 at the end of the tax year.

• Dependent

A Taxpayer's child (older than 17) or relative whom he or she is supporting financially in whole or in part and which entitles the Taxpayer to a deduction.

• Estimated Tax

Income that is not subject to withholding tax (such as investment or self-employment income). In some cases, quarterly payments are required to be made in the estimated amount necessary to cover the anticipated tax liability for the year.

• Filing Status

Each taxpayer must choose a filing status on their tax return. This status will determine, among other things, the tax rate and deduction possibilities.

There are five categories: single, married filing jointly, married filing separately, head of household and qualifying widow or widower with dependent child.

• Gross income

All income from taxable sources, before subtracting deductions.

• IRS (Internal Revenue Service)

Government agency in charge of tax collection.

• Tax bracket:

Each bracket covers a certain amount of income to be taxed at a certain rate.

• Tax refund:

The money you receive from the IRS when you have paid more taxes than you should have (usually through withholding).

• Withholding Tax

Amount withheld by the employer from its employees' salary to pay income tax and social security contributions.


Every year, you will have to file your Federal tax return; the deadline is different from one year to another:

At the time of hire, you must complete a W-4 form in which you will provide information regarding your marital status, whether you have children, and whether you have another job. This document serves as the basis for the employer to calculate the amount of tax withheld.

It is important to fill out this paper correctly so that the employer can adjust the amount withheld.


The United States has a progressive bracket system. The first income bracket is taxed at the lowest rate and so on.

The graduated scale has 7 brackets ranging from 10% to 39.6%. The amount of the brackets varies depending on the filing status chosen for the return (single, married filing jointly or separately, etc.).

You can follow this link to have an idea of this amount:

On the other hand, we are unable to give you the amount for your State income taxes, since each state is different from another, as we explained at the beginning of this article.


First, you must calculate your "gross income" by adding the following incomes:

  • - Salary

  • - Property income

  • - Bank interest

  • - Dividends


The main deductible fees are listed below:

  • - Business expenses (travel, supplies, etc.)

  • - Donations to charities

  • - Interest on housing loans

  • - Childcare expenses

  • - Dependent expenses

Taxpayers may ask tax questions by calling the toll-free customer service line at the phone number: 1-800-829-1040.