Find out the Nitty-Gritties of Taxation Services in the USA

Taxation in the USA is a multi-level and complex structure that involves federal, state, and local governments. The involvement of three government bodies imposes a wide range of taxes on US citizens as well as US residents.  From tax returns to tax credits, the taxation in the USA is progressive at the federal income tax level.  State and local tax rates in the country vary from jurisdiction to jurisdiction, from 0% to 13.30% of income. US residents and US citizens are taxed in the same manner. This implies that their global income is subject to US tax. 

In this article, we will dive into the ins and outs of US taxation services, shedding light on tax returns, tax preparation, and income tax credit services. Let’s proceed with our discussion of US taxation services. However, before discussing these services, we will briefly learn about the three types of taxation systems in the country.

Federal Taxation System

The federal government is the largest collector of tax revenue, with the Internal Revenue Service (IRS). It acts as the collection agency of the IRS. Listed below are the types of federal government taxes that are imposed on US citizens and residents:

1. Federal Income Tax

Federal income tax is the largest source of revenue for the federal government. Tax rates depend on an individual's filing status in this taxation system. For example, tax rates will vary for singles and married individuals. Taxable income is divided into brackets, and higher rates are applied to income that falls within the higher brackets. For instance, the 2025 federal income tax rates range from 10% to 37%. In federal taxes, taxable income can be decreased by taking the standard deduction. Tax credits can further lower the amount of tax owed.  

2. Payroll Taxes (FICA)

Payroll taxes are deducted from employee paychecks to fund Social Security and Medicare. There are two types of payroll taxes within the federal taxation system- FICA tax and Additional Medicare tax. The Federal Insurance Contributions Act (FICA) tax includes a 6.2% Social Security tax and a 1.45% Medicare tax. The Employer and the employee both pay the FICA tax. On the other hand, a 0.9% tax is levied on self-employment income and wages over certain thresholds. 

3. Corporate Income Tax

Corporations pay a federal tax rate of 21% on their taxable income. When it comes to capital gains, the federal tax rate depends on the time period the asset was held. Long-term gains are generally taxed at lower rates compared to short-term gains. Short-term gains are taxed at the general income tax rate.

State and Local Taxes

State and local taxes also vary depending on the jurisdiction. Below are the types of taxes levied by the state and local government. 

1. State Income Tax

In terms of state income tax, most states levy an income tax, and the rates can be graduated or flat. However, there are states in the USA with no income tax. As of 2025, eight states in the United States do not have a state income tax, including: Florida, South Dakota, Alaska, Nevada, Wyoming, Texas, New Hampshire, and Tennessee.

2. Sales and Use Tax

Most states and the majority of local governments impose a sales tax on the retail sale of goods and services. The seller collects this tax while selling. Rates and exemptions differ by state. For instance, some states exempt prescription drugs from sales tax.

3. Property Tax

Local governments impose a property tax. This tax is based on the assessed fair market value of real estate. It also serves as a major funding source for local services like infrastructure and schools.

Excise Taxes

Excise taxes are levied on specific goods and services, such as gasoline, tobacco, and alcohol, by the state, federal, and local governments.

Tax Preparation Services in the USA

The basic requirement for all paid tax preparers with the IRS is to pass the suitability check and obtain a PTIN. There are several tax preparation services available in the USA. Let’s have a look at the top 5 tax preparation companies offering the best services:

1. KSM Business Services, Inc.

KSM or Katz Sapper and Miller, LLP was founded in 1942. The company specializes in delivering accounting, auditing, consulting, and tax services. From internal control assessments to technology consulting services, this company offers a variety of services. KSM addresses the real estate, litigation, construction, support, manufacturing, trucking, and not-for-profit industries.

2. Grassi and Co., CPAs, P.C.

Grassi and Co., CPAs, P.C., is a provider of accounting and auditing services. The company offers auditing and accounting, personal financial planning, tax planning and preparation, business planning, financial assistance, IT and human resources consulting, and litigation services. Fundamentally, the company serves banks, industries, law firms, banks, other accounting firms, and municipalities.

3. Carr, Riggs, & Ingram CPA and Advisors, LLC

Carr, Riggs, & Ingram CPA and Advisors, LLC is a US-based accounting company that provides account outsourcing, internal auditing, financial statement preparation, tax planning, and advisory services.

4. Elliott Davis, LLC

This is a business solutions firm delivering a comprehensive suite of services in the areas of tax, comprehensive assurance, and consulting services to diverse businesses, individuals, and organizations. Its service delivery spans areas including corporate tax compliance, assurance, transaction advisory, risk management, business growth strategies, valuation, cybersecurity, and transfer pricing services.

5. Aprio Wealth Management, LLC

Aprio, LLP offers forensic litigation, financial and estate planning, tax planning and consulting, risk advisory, cost segregation, corporate tax return preparation, mergers and acquisitions advisory services. The company serves businesses, entrepreneurs, investors, and families.

Exploring Tax Returns and Earned Income Tax Credit in the USA

Earned Income Tax Credit: Here is What It is All About

The earned income tax credit,  or EITC, is a refundable tax credit for individuals and families with low-to-moderate income. To be eligible, you must meet income limits and other requirements, such as age, filing status, and citizenship or residency status. Having children, a disability, or dependents can affect the credit amount. The EITC helps offset tax burdens, provides a financial incentive to work, and supplements wages. To claim the EITC, you must qualify based on IRS criteria and file a federal tax return using Form 1040 or 1040-SR.     

Tax Returns: What Are They and How Are They Filed?

Tax returns in the USA are annually filed reports with the IRS to report income, calculate tax liability, and request a refund for any overpayment. Filing a tax return in the US requires collecting required documents, which include details of earnings, tax-deductible expenses, and income. Next, one needs to have records of expenses like mortgage interest, state and local taxes, medical costs, and charitable donations. Furthermore, one must determine one’s filing status, like single, married filing separately, qualifying widow, or head of household. Determine the deduction method before filing. One can file tax returns either through the IRS or paid software. Eligible taxpayers in participating states can file their federal taxes directly with the IRS for free.

At The Silicon Journal, we recognize the importance and complexity of paying taxes. We guide taxpayers on the USA's various tax systems. Our articles and blogs give readers clear information on taxation topics, services, and industries.