How do taxes affect income inequality? Q.How do taxes affect income inequality? A.Because high-income households pay a larger share of their income in total federal taxes than low-income households, federal taxes reduce income inequality. But federal taxes have done little to offset increasing income inequality over the past 40 years. Read more about How do taxes affect income inequality?
What is Free File? Q.What is Free File? A.Taxpayers with low to moderate incomes can obtain free tax preparation software to complete and file their tax returns electronically. The Free File program can be difficult to access, and most eligible taxpayers do not use it. Read more about What is Free File?
How does the federal tax system affect low-income households? Q.How does the federal tax system affect low-income households? A.Most low-income households do not pay federal income taxes, typically because they owe no tax (as their income is lower than the standard deduction) or because tax credits offset the tax they would owe. Some receive substantial rebates via refundable tax credits. However, nearly all low-income workers are subject to the payroll tax. Read more about How does the federal tax system affect low-income households?