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United States Tax Guide

North America
Updated January 2025
Sources + last updated

This page includes citations to the sources used for this entry. Always verify with official sources before making decisions.

Personal Tax Score
45/100
High Tax
Business Tax Score
65/100
Moderate

Personal Income Tax

Tax Residency

Day Threshold
183 days
Note
Green card test or substantial presence test (31 days current year + 183 days over 3-year rolling period)

Income Tax Rates

Top Marginal Rate
37%
Structure
Progressive 10-37% federal; state taxes 0-13.3% additional

Foreign Income Treatment

System
Worldwide
Details
US citizens and residents taxed on worldwide income; Foreign Earned Income Exclusion ($130,000 for 2025)

Investment Income

Capital Gains
0-20%%
Dividends
0-20%%
Interest
0-37%%

Preferential rates for long-term capital gains; 3.8% NIIT may apply


Wealth & Inheritance

Wealth Tax
No - No federal wealth tax; some state property taxes
Inheritance Tax
Yes - Federal estate tax 18-40% above $13.99M exemption (2025)

Special Regimes

Foreign Earned Income Exclusion
Up to $130,000 of foreign earned income excluded from tax (2025)
Foreign Tax Credit
Credit for foreign taxes paid on foreign income

Practical Notes

Worldwide taxation for citizens regardless of residence. State taxes add significantly. Citizenship-based taxation unique among major countries.

Business & Corporate Tax

Corporate Income Tax

Headline Rate
21%
Effective Rate Note
21% federal + state taxes (average ~26% combined)
Free Zone / Incentives
Various state and federal incentives available

Withholding Taxes

Dividends
30%
Interest
30%
Royalties
30%

VAT / GST

Rate
0%
Note
No federal VAT; state sales taxes 0-10%+

Compliance & Substance

Substance Requirements
High - strict substance and documentation requirements
Compliance Friction
High - complex tax code, extensive reporting

Notable Regimes

  • GILTI regime for foreign income
  • FDII deduction
  • BEAT minimum tax

Data Sources

Last updated: January 2025. Always verify with official sources before making decisions.

FAQ

What is the personal income tax rate in United States?

United States has a top personal income tax rate of 37%. The tax structure is: Progressive 10-37% federal; state taxes 0-13.3% additional. See the detailed breakdown above and verify with official sources.

Do I need to pay tax on foreign income in United States?

United States uses a worldwide system for foreign income. US citizens and residents taxed on worldwide income; Foreign Earned Income Exclusion ($130,000 for 2025)

What are the residency requirements for United States?

Tax residency in United States generally requires 183 days of physical presence. Green card test or substantial presence test (31 days current year + 183 days over 3-year rolling period). Always verify current rules with official sources.

Is there a wealth tax in United States?

No, United States does not have a wealth tax. No federal wealth tax; some state property taxes

What is the corporate tax rate in United States?

The corporate tax rate in United States is 21%. 21% federal + state taxes (average ~26% combined)