What are the differences between federal taxes and state taxes?
When the United States was created it was founded with the sole purpose of true democracy, and giving the power to the people. We believed there should be a decentralization of power, and that the power should be split up. Thus we created the three branches of government we have today, but we also created two forms of government: the Federal Government and the State governments. This allows there to be one big government that oversees the country, and 50 smaller governments to oversee their respective state. Both forms of government establish their own laws, and also impose their own taxes. Every year before the April 15th deadline, we as citizens when we make a source of income throughout the year, must pay taxes. We pay these taxes to the federal and state levels. We typically only pay an income tax to the federal government which is set at certain tax brackets (percentage of income) that relies on your overall income. For example, a person making $100,000 would have to pay about 25% of that to the federal government, so $25,000. On the state level, each state has its own rates for its taxes. These state taxes include another income tax (a much lower percentage), a property tax, and an estate tax. These taxes are usually much smaller compared to the federal tax, but work the same. There's also the state sales tax and sin tax, which depend entirely on the purchases we make throughout the year. Please note that these taxes, when you make an income, are mandatory and are punishable by law if you refuse to pay them.