What is a tax code?
In the United States, the federal and state governments impose a variety of taxes under their respective tax laws, often referred to as tax codes. An income tax code is a law that prescribes the rules that individuals, businesses, and other entities must follow when paying a portion of their income into the
government of the jurisdiction from which their income originates.
The US federal government and most states impose income taxes. Other types of taxes also imposed in various jurisdictions include domain, legacyownership and sales and use taxes.
Key points to remember
- The United States income tax code, the Internal Revenue Code, is a federal law, numbering thousands of pages, which prescribes the rules that individuals, businesses and other entities must follow in
paying a portion of their income to the federal or state government. - The U.S. Congress enacts the tax laws that set the rules for federal income tax
and other taxes. - The Internal Revenue Service (IRS) interprets and implements statutory rules in
regulations that have the force of law, as well as in official tax rulings and private letter rulings.
How the US Tax Code Works
In the United States, the US Congress enacts tax laws that generate revenue for the federal government. These rules are the official document of the United States Internal tax code (IRC). The Tax Service (IRS) implements the statutory rules in accordance with the Treasury Departmental regulations that prescribe how they apply in different scenarios. At the state level, tax laws are set by state, local, and county government authorities. Many states model the main provisions of their income tax laws on the substantive rules of the federal tax code, but impose different rates and often provide different exemptions and exclusions.
The Internal Revenue Code contains thousands of numbered sections that provide
definitions, rules and levies. Regulations issued under the tax code by the Treasury Department
contain more detailed rules that prescribe the application of the code in specific circumstances. These regulations are legal requirements that taxpayers must follow. They are published in Title 26 of the Code of Federal Regulations (26 CFR).
In addition to income tax, the tax code and regulations cover the tax treatment of estates, gifts, and pension and benefit plans; set social security, railway pension and unemployment contributions; prescribing excise taxes; and establishing administrative, procedural, sanctioning, restraint and other rules. For example, Sections 1 through 5 of the Internal Revenue Code impose federal income tax on the taxable income of U.S. citizens and residents, section 11 imposes corporation tax, and Section 641 taxes estates and trusts. Later provisions cover a wide range of topics, for example, alcohol, tobacco and other excise taxes begin with section 5001, and the rules on crimes and criminal penalties begin at section 7201.
Title 26 – Internal Tax Code
Subtitle B – Inheritance and gift taxes (articles 2001 to 2704)
Subtitle C – Taxes on employment (items 3101 to 3512)
Subtitle D—Miscellaneous Excise Duties (items 4041 to 4982)
Subtitle E—Alcohol, tobacco and certain other excise taxes (items 5001 to 2872)
Division F—Procedure and administration (items 6012 to 7874)
Subtitle G – Joint tax committee (items 8001 to 8023)
Subtitle H – Financing of presidential electoral campaigns (items 9001 to 9042)
Subtitle I—Trust Fund Code (items 9500 to 9602)
Subtitle J—Health Benefits of the Coal Industry (items 9702 to 9722)
Subtitle K—Group Health Care Plan Requirements (items 9801 to 9834)
Tax Guidance Resources
Most taxpayers with typical sources of income do not need to search
technical complexities of the federal tax code and regulations. Every year, the tax
issues tax forms and instructions to taxpayers on how to complete and file their
Return.
The IRS also issues publications that provide individuals with plain language advice for both common situations, for example, selling a home, and less common circumstances. Similarly, IRS publications for business taxpayers explain how to manage capital investments, expenses, and income. Other publications describe the special rules for charities and other organizations. IRS publications are available free of charge in print or online at the IRS website. These IRS resources allow taxpayers to manage their own filings or, for complicated filings, help them better understand the issues they bring to counsel.
What is a tax code?
A tax code is a law that prescribes the levies imposed by a government on individuals, businesses, other entities, and on transactions, such as sales of goods, that fall within its jurisdiction, to fund its operations. In the United States, federal, state, and local governments have enacted tax codes of varying scope and design.
Which tax codes apply to individuals?
The US government and most state and local governments have income tax codes that
are the main tax liability for most taxpayers. State and local jurisdictions also impose a variety of taxes which, in some cases, create substantial costs for individuals, for example, sales and use and property taxes.
Where can you find the US income tax rules?
The US income tax code, officially the Internal Revenue Code, contains the statutory rules enacted by the US Congress to determine taxable income and the amount of tax payable on that income. Regulations issued by the Treasury Department provide more detailed rules based on the Code; these regulations also have the force of law. Taxpayers can get free, plain language tax compliance advice on the IRS website. The site offers articles on common tax topics and also provides links to IRS publications that contain more detailed advice that is generally understandable to a non-technical reader.
The essential
The Internal Revenue Code contains a wide range of federal tax levies. Taxpayers
are required to comply with both the code and the regulations made thereunder.
Many tax rules are very technical and complex, but for most individuals
taxpayers, the IRS provides free, clear and easily accessible advice.
The Internal Revenue Code and Code of Federal tax regulations
Regulations (CFR) available online. National Archives electronics
version of the CFR is continuously updated. However, most
individuals will find adequate information in topical income tax advice
the IRS website, In addition, the IRS publications accessible through links on the site offer clear and useful help in plain language.
Many commercial tax preparation software, as well as the free online program
that the IRS offers to people with modest and low incomes, provide useful information
instructions. For more complex situations, expert tax advice may be required.