Categories: Income

Income Tax Definition: Understand Your Forex Trading Taxes

Income tax is a tax imposed on individuals or entities that varies with fluctuating levels of income or profits (taxable income). Income tax generally is computed as the product of a tax rate times taxable income. Tax rates may vary by type or characteristics of the taxpayer. The tax rate may increase as taxable income increases (referred to as graduated or progressive rates). Tax rates may vary for different types of income. In some tax systems, certain types of income may be taxed at different rates than other types of income. For example, tax rates may be higher for unorthodox methods of acquiring income such as earned income from gambling. The tax rate also may be different for natural persons and corporations. The tax rate may change from year to year to account for general changes in market wages.

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