The 5 Biggest Taxes That Americans Pay

Where does the government get its money? From taxpayers like you, of course.

However, some types of taxes provide a lot more revenue to federal, state and local governments than others.

Recently, the Tax Foundation took a deep dive into the data to uncover which taxes provide the most money to governments. Following are the top sources.

1. Individual income taxes

This source of government revenue as a share of total tax revenue in the U.S.: 42.1%

Federal, state and local governments all can collect income taxes, which are levies on income that individuals and businesses receive.

At the federal level, taxes are progressive in the U.S., and you generally pay a higher percentage of your income in tax as you earn more money.

States and local governments have their own methods of taxing people. Some have a progressive system, and others charge a flat tax where everyone pays the same rate regardless of how much income they earn.

Some state and local governments do not levy income taxes at all.

2. Social Security taxes

This source of government revenue as a share of total tax revenue in the U.S.: 23.8%

Social Security taxes are a form of payroll tax in the U.S. These taxes are used to fund the nation’s Social Security program, which provides retirement, disability and survivor benefits to eligible workers and their families.

If you work for someone else, your employer pays 6.2% of your wages in Social Security taxes, and you pay the other 6.2%. Self-employed individuals pay the entire 12.4% on their own.

Social Security taxes only apply to a maximum of $160,000 in wages as of 2023.

3. Consumption taxes

This source of government revenue as a share of total tax revenue in the U.S.: 16.6%

A consumption tax is a levy that you pay when you buy a good or service. Unlike many other countries, the U.S. does not have a national consumption tax.

However, at the state and local level, millions of Americans regularly pay sales taxes.

Other sources of tax revenue

Other commonly paid taxes include:

• Property taxes: 11.4% of total tax revenue in the U.S.
• Corporate taxes: 6%
• Other taxes: 0.1%