United States Tax Rates 2023

Income tax in United States ranges from 10.00% to 37.00% in 2023. The 10.00% rate applies to low earners, while the top marginal rate of 37.00% applies to the highest income bracket. The estimated effective rate at average income is approximately 20.2%.

The standard corporate income tax rate in United States is 21.00% as of 2023. This is in line with the global average corporate tax rate.

The standard VAT (Value Added Tax) rate in United States is 0.00%. United States does not levy a national VAT or GST..

Capital gains tax in United States is 23.80% in 2023. Dividend income is taxed at 23.80%.

In United States, employees contribute 6.20% of their gross salary to social security. Employers contribute an additional 6.20%. These contributions typically cover pensions, healthcare, and unemployment insurance.

United States levies an inheritance or estate tax at rates up to 40.00%. The actual rate depends on the value of the estate and the relationship between the deceased and the beneficiary — close relatives typically pay lower rates.

United States has a high overall tax burden. The maximum combined income tax and employee social security rate reaches 43.2%.

The top income tax rate in United States is 37.00%, compared to a Americas average of 33.5% among neighbouring countries. United States taxes income at a higher rate than the regional average.

The effective tax rate is the actual percentage of income paid in tax — lower than the top marginal rate because lower brackets are taxed at lower rates. In United States, the estimated effective income tax rate for an average earner is approximately 20.2% (2023), compared to the headline top rate of 37.00%. Adding employee social security of 6.20% gives a total effective burden of roughly 25.2% on gross pay.

United States uses a progressive income tax system with rates ranging from 10.00% at the lowest bracket to 37.00% at the top bracket (2023). Each band is taxed at its own rate; you only pay the higher rate on the portion of income that falls into that bracket. The number and thresholds of brackets vary by country and are typically adjusted annually for inflation.

Dividend income in United States is taxed at 23.80% (2023). This is lower than the top income tax rate of 37.00%, meaning dividend income is taxed more favourably than employment income. Withholding tax may also apply to dividends paid to non-residents.

In United States, tax residency is typically determined by the number of days spent in the country (often 183 days per year) or by having a permanent home there. Tax residents are liable for income tax at the same rates as citizens — 10.00% to 37.00% — on their United States-sourced or worldwide income depending on the tax regime. Non-residents are typically taxed only on income sourced within United States. United States has tax treaties with many countries to prevent double taxation.

Freelancers and self-employed individuals in United States typically pay income tax at the same progressive rates as employees — 10.00% to 37.00% — on their net profit after allowable business expenses. Unlike employees who split social security with their employer, self-employed workers often pay both the employee (6.20%) and employer (6.20%) portions themselves, significantly increasing the total tax burden. Self-employed workers are usually required to file a self-assessment tax return and make advance tax payments during the year.

United States does not currently levy a national wealth or net worth tax. Assets are taxed when sold (capital gains tax) or on income generated (dividends, rent), but simply holding wealth does not trigger an annual tax.

The standard income tax return filing deadline in United States is April 15. Extensions are sometimes available but must be requested in advance. Filing late typically incurs interest charges and penalties. Most countries require employees whose tax is fully withheld at source to file only if they have additional income, deductions to claim, or earned above a threshold.