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income tax definition - finance
An annual federal tax that U.S. citizens, residents, and corporations have to pay on income. Some state and local governments have income taxes as well. Income tax was created in 1913 by the Sixteenth Amendment to the Constitution. The federal tax is progressive, meaning that it taxes an increasingly large percentage of personal income as individuals become wealthier.

Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.

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