What type of tax is imposed on income earned from employment?

Income tax is a tax levied directly on the income earned by individuals or entities, particularly from employment. It is one of the primary sources of revenue for governments and is typically calculated as a percentage of the total income earned during a specific period, such as annually. When individuals work, they receive compensation, which is classified as earnings or wages—this falls under the category of taxable income.

Income tax is progressive in many jurisdictions, meaning that the tax rate increases as the income level rises. This system is designed to ensure a fair distribution of the tax burden according to individuals' ability to pay. Also, many countries provide various deductions and credits that can lower a taxpayer's obligation.

In contrast, capital gains tax applies to the profits made from the sale of an asset, value-added tax (VAT) is a consumption tax on goods and services, and property tax is levied on real estate ownership. Therefore, income tax is specifically associated with earnings from employment, distinguishing it from these other tax types.