--- title: What Is Federal Income Tax | Definition | Government | Rate description: The U.S. federal income tax is a tax levied on the income of individuals, corporations, trusts, and other legal entities. image: https://www.realized1031.com/hubfs/social-suggested-images/Realized_Glossary_Graphic-4.jpg --- [![Realized 1031 Exchange Marketplace](https://www.realized1031.com/hs-fs/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black.png?width=240&height=80&name=Realized-Logo-Black.png "Realized 1031 Logo") ](https://www.realized1031.com/) - Better Business Bureau Rating: **A+** - [FINRA BrokerCheck](https://brokercheck.finra.org/firm/summary/22333) - [Call](tel:1-877-797-1031) **(877) 797-1031** # Federal Income Tax The U.S. federal income tax is a tax levied on the income of individuals, corporations, trusts, and other legal entities. The federal income tax is a source of revenue for the federal government. The government uses money from the tax to build and improve the country’s infrastructure, fund entitlement programs, and disaster relief. The federal income tax is different from local and state taxes. Local taxes create revenue for cities and counties. State taxes do the same at the state level. Local and state taxes are also levied on the income and purchases of individuals and corporations. Not all states have an income tax. There are currently nine that do not. 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The federal income tax is different from local and state taxes. Local taxes create revenue for cities and counties. State taxes do the same at the state level. Local and state taxes are also levied on the income and purchases of individuals and corporations. Not all states have an income tax. 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