United States
Northern America • UTC-4 • America/New_YorkUS Federal Income Tax System
The US federal tax system is progressive, with rates ranging from 10% to 37% for individuals. Corporate tax is a flat 21%, and there is no federal VAT, but state-level sales taxes apply.
Income Tax
10%–37%
Progressive federal rates
Corporate Tax
21%
Flat federal rate
VAT / GST
N/A
No federal VAT
Nomad Visa
Not Available
No dedicated program
Tax System Overview
The US tax system is progressive, taxing residents on worldwide income and non-residents on US-source income. It includes federal, state, and local taxes.
System Type
Progressive federal income tax
Resident Taxation
Taxed on worldwide income.
Non-Resident Taxation
Taxed on US-source income only.
Tax Year
January 1 – December 31
Income Tax Bands
US federal income tax bands for 2025 based on annual taxable income.
Tax Treaty
Tax treaties help prevent double taxation and provide relief for cross-border income.
United Kingdom
Treaty ActiveThe US-UK tax treaty reduces withholding taxes on dividends, interest, and royalties, and clarifies residency rules.
Key Benefits
Reduces withholding tax on dividends, interest, and royalties.- Clarifies tax residency to determine where taxes should be paid.
- Provides relief for pensions and certain social security benefits.
Totalization Agreement
Totalization agreements coordinate social security systems to prevent dual contributions.
United Kingdom
Agreement ActiveThe US-UK totalization agreement prevents workers from paying social security taxes in both countries simultaneously.
Coverage Areas
Facts
- Prevents double taxation of social security contributions for US-UK workers.
- Allows workers to combine contribution periods for benefits eligibility.
- Applies to employees, self-employed, and certain government workers.
Other Countries with Agreements
Business & Freelancing
Corporate Tax Rate
21% flat rate for corporations
VAT Registration
No federal VAT; state sales tax applies
Freelancer Rules
Self-employed individuals pay self-employment tax and income tax on net earnings.
Crypto Policy
Cryptocurrency transactions are taxable; capital gains apply.
Frequently Asked Questions
Digital Nomad & Benefits
Visa Details
Tax Perks
- No federal VAT; state sales taxes apply
- Progressive federal income tax rates
Filing Roadmap
Gather Income Documents
Collect all income statements, including W-2s, 1099s, and foreign income documentation.
Determine Filing Status
Choose the appropriate filing status: single, married filing jointly, married filing separately, head of household, or qualifying widow(er).
Calculate Deductions and Credits
Determine eligibility for deductions and credits, such as the standard deduction, itemized deductions, and tax credits.
File Your Tax Return
Submit your federal tax return using IRS Form 1040 by April 15. Consider e-filing for faster processing.
Pay Any Tax Due
Pay any taxes owed by the filing deadline to avoid penalties and interest. Payment options include electronic funds withdrawal, credit card, or check.