Flat rate tax system
A flat tax (short for flat-rate tax) is a tax system with a constant marginal rate, usually applied to individual or corporate income. A true flat tax would be a proportional tax, but implementations are often progressive and sometimes regressive depending on deductions and exemptions in the tax base. Colorado, Illinois, Indiana, Massachusetts, Michigan, New Hampshire, Pennsylvania, and Tennessee use the flat tax system as of 2019. Rates range from a low of 3% in Tennessee up to the highest rate of 5.10% in Massachusetts. A flat tax refers to a tax system where a single tax rate is applied to all levels of incomeAnnual IncomeAnnual income is the total value of income earned during a fiscal year. Gross annual income refers to all earnings before any deductions are made, and net annual income refers to the amount that remains after all deductions are made.