Income tax is a Federal tax levied on the taxable income of a person or business in a given year. Option A is incorrect as it refers to employer's tax, not individual tax. Option C is incorrect as states can levy income tax, but it varies by state. Option D is partially correct, but it doesn't include Federal income tax which is the main type of income tax in the US.

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Income Tax Is

Question 24

Multiple Choice

Income tax is:

A) a Federal tax payable by an employer on the benefits it gives to employees.
B) a Federal tax levied on the taxable income of a person or business in a given year.
C) a State tax levied on the income and capital gain of a person or a business in a given year.
D) a State tax levied on the income of a person or business in a given year.

Correct Answer: