Income tax is a government-imposed tax on the money you earn — whether you are an individual (personal income tax) or a business (corporate income tax). It is typically the largest source of government revenue.
Most countries use a progressive tax system where higher earners pay a higher percentage. For example, in the US, income up to $11,000 might be taxed at 10%, while income above $578,000 is taxed at 37%.
Businesses calculate income tax on their taxable income (revenue minus deductible expenses). Tax planning — using legal deductions, credits, and strategies — helps minimize the tax burden.