An income tax is a tax that is based one the amount of money earned by an individual. In 1913, the Sixteenth Amendment was passed that allowed the government the ability to collect, or levy this tax.

Income tax is the largest source of revenue for the Federal Government. These income taxes are not based on the total income, but rater the amount of money that is left over after deductions have been subtracted. The amount that is left over after all possible deductions and exemptions is called the taxable income. Taxpayers must pay the government an income tax on a part of this taxable income.

A system of withholding taxes has been designed for employers. Employers subtract a certain part of money from every employees gross income. This money is directly sent to the federal and state governments. A summary of these withholdings is presented to the employee on a W2 form that aids the employee in the completion of taxes.