What is the Difference Between Progressive and Regressive Taxes?

A progressive tax is a type of tax that takes a larger percentage of income from taxpayers as their income rises. An example is the federal income tax, where there are six marginal tax brackets ranging from 10% (lowest-income taxpayers) to 39.6% (highest-income taxpayers). Most state income taxes have a similar progressive structure.

A regressive tax is the exact opposite. Higher-income taxpayers pay a smaller percentage of their income than lower-income taxpayers because the tax is not based on ability to pay. An example is state sales tax, where everyone pays the same tax rate regardless of their income.

We’re collecting feedback on FAQs. Please complete this quick survey to help with our continual improvements.