*The US has no national VAT or GST; sales tax is set at the state and local level and varies widely (0% to over 10% combined, depending on state and locality) - see VAT/GST section below.
The United States taxes on a worldwide basis for residents, and uniquely (with Eritrea) also taxes on the basis of citizenship alone - a US citizen owes US tax on worldwide income regardless of where they live, unless a specific exclusion or credit applies. The US operates a genuine self-assessment system, one of the first in the world (adopted in the 1910s per IMF research): taxpayers calculate their own liability, file a return, and pay - the IRS reviews and audits after the fact rather than issuing an assessment before payment is due. This page states federal rates only. State (and in some cases local) corporate and personal income tax layers on top of the federal rate and varies enormously, from no state income tax at all (Texas, Florida, Nevada, and several others) to combined state-plus-federal top marginal rates well above the federal rate alone (California, New York); confirm the specific state and local rate for a given transaction or residency separately.
The US tax year is the calendar year (1 January - 31 December) for individuals. The main individual filing and payment deadline is 15 April of the following year; US citizens and residents living abroad receive an automatic 2-month extension to 15 June (payment is still due 15 April to avoid interest), and a further extension to 15 October is available by filing Form 4868. Corporate deadlines generally track the corporation's own fiscal year-end.
United States's headline corporate income tax (CIT) rate is Federal 21%; state 1-12% additional.
The headline personal income tax (PIT) rate is 37%.
0% at the federal level - the US has no national VAT or GST. Sales tax is instead imposed at the state and local level, varies widely by jurisdiction (no sales tax in some states; combined state/local rates exceeding 10% in others), and is administered separately from federal tax.
An individual is a US tax resident for the year if they meet either the Green Card Test (held lawful permanent resident status at any point in the year) or the Substantial Presence Test under IRC §7701(b)(3): physically present at least 31 days in the current year, and at least 183 days counting all current-year days, 1/3 of the prior year's days, and 1/6 of the days from two years prior. US residents are taxed on worldwide income; nonresidents generally only on US-source income and income effectively connected with a US trade or business.
A non-US person or entity generally has a US permanent establishment (or, more precisely, a US trade or business generating effectively connected income) through a fixed place of business, or through a dependent agent habitually concluding contracts on the entity's behalf in the US; the specific test under an applicable tax treaty may narrow or modify this domestic-law standard.
A foreign corporation is a Controlled Foreign Corporation (CFC) under IRC §957 if US shareholders (each owning at least 10% of vote or value) collectively own more than 50% of the corporation's vote or value. Those 10%-plus US shareholders must include their pro rata share of the CFC's Subpart F income and Net CFC Tested Income (NCTI) - the regime renamed from GILTI by the One Big Beautiful Bill Act (OBBBA, P.L. 119-21) for tax years beginning after December 31, 2025. Under OBBBA, the IRC §250 deduction for NCTI drops to 40% and the 10% Qualified Business Asset Investment (QBAI) exclusion is eliminated, producing a US effective rate of approximately 12.6% on CFC tested income for corporate shareholders claiming the full deemed-paid foreign tax credit (increased to 90% under OBBBA). OBBBA also reinstated IRC §958(b)(4) (blocking certain downward attribution) while adding new IRC §951B to capture specific foreign-controlled CFC structures.
IRC §163(j) caps the deduction for business interest expense at 30% of Adjusted Taxable Income (ATI), plus business interest income and floor-plan financing interest. OBBBA permanently restored an EBITDA-based ATI calculation (adding back depreciation, amortization, and depletion) for tax years beginning after December 31, 2024, reversing the stricter EBIT-based method that applied for 2022-2024. Disallowed interest carries forward indefinitely. The limitation applies only to taxpayers whose average gross receipts over the prior three years exceed the indexed small-business threshold (approximately $31 million for 2025).
The US uses an elective "check-the-box" entity classification system (Form 8832) that is highly unusual internationally: an eligible domestic or foreign entity can elect to be treated as a corporation, partnership, or disregarded entity for US tax purposes, largely independent of its actual legal form in the jurisdiction where it was formed. A single-member LLC is disregarded by default (its activity reported directly on the owner's return) unless it affirmatively elects corporate treatment; a foreign-owned disregarded entity must still file Form 5472 and a pro forma Form 1120. This elective flexibility is the foundation of most hybrid-entity cross-border structuring involving the US - the same US LLC can be treated as tax-transparent for US purposes while being treated as opaque (taxable) by a foreign counterparty jurisdiction, a mismatch other countries' anti-hybrid rules increasingly target.
The United States is the origin jurisdiction for the two reporting regimes referenced on every other page of this guide, so its own treatment is the reverse of the usual pattern. US persons (citizens, Green Card holders, and residents) with foreign financial accounts exceeding USD 10,000 in aggregate at any point during the year must file FinCEN Form 114 (FBAR) with the Treasury's Financial Crimes Enforcement Network, separate from the income tax return. US persons holding specified foreign financial assets above threshold (USD 50,000 at year-end / USD 75,000 at any point during the year for single filers living in the US, with higher thresholds for joint filers and for taxpayers living abroad) must also file Form 8938 with their income tax return under FATCA - the two filings are separate, can both apply to the same accounts, and neither relieves the obligation to file the other. Foreign financial institutions report US account holders to the IRS (directly or via intergovernmental agreement), but the US provides only limited reciprocal data back to partner countries under Model 1 IGAs (for example, interest income, but not the full range of account and asset data CRS jurisdictions exchange with each other). This asymmetry is a widely-noted point of criticism from the OECD Global Forum, the EU, and tax-transparency advocates, who describe the US as the single largest structural gap in global automatic exchange.
The US does not have a general participation exemption for dividends received by individuals; for US corporate shareholders, IRC Section 245A provides a 100% dividends-received deduction for the foreign-source portion of dividends received from a specified 10%-or-greater-owned foreign corporation, effectively exempting qualifying foreign dividends from US corporate tax (though GILTI/NCTI inclusions under the CFC rules operate on a separate track and are not eliminated by this deduction).
The US has a real foreign tax credit regime available to both individuals and corporations, authorized under IRC Section 901, functioning as the primary mechanism preventing double taxation of foreign-source income. It is an ordinary credit (not full exemption): the credit is capped at the US tax otherwise due on the same foreign-source income, computed separately by income category, with excess credits generally eligible for one-year carryback or ten-year carryforward. Individuals claim it on Form 1116; corporations claim it on Form 1118.
The US maintains income tax treaties with approximately 65 countries per the IRS's Table 3 (current as of early 2026), reducing withholding rates on dividends, interest, and royalties and providing double-tax relief and Mutual Agreement Procedure dispute resolution. Several former Soviet republics (Armenia, Azerbaijan, Belarus, Georgia, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Uzbekistan) remain covered by the original US-USSR treaty pending individually negotiated replacements. The Hungary treaty was terminated effective January 1, 2024 with no replacement in force. For the full text of every US income tax treaty and protocol, and the current authoritative list, see the IRS United States Income Tax Treaties - A to Z.