Financial Terms Dictionary: ELI5 Version - Income Tax

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Income Tax:

a principal component of the fiscal system in many nations, constitutes a progressive tax levied by governmental authorities on an individual's or entity's earnings, profits, or other forms of financial gains within a specified tax year. This levy is determined based on an intricate set of tax laws, regulations, and rates, which progressively increase with rising income levels, ascertaining a proportionate burden-sharing mechanism to promote social equity and fund various public expenditures.