progressive tax

Progressive Tax

A tax that takes a larger percentage from the income of high-income people than it does from low-income people.

Notes:

Most income taxes are considered progressive.

See also: Flat Tax, Income Tax, Regressive Tax

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progressive tax

A tax with a rate that increases as the amount to be taxed increases. For example, a taxing authority might levy a tax of 10% on the first $10,000 of income and increase the rate by 5% per each $10,000 increment up to a maximum of 50% on all income over $80,000. A progressive tax often uses high rates on relatively large incomes and tends to encourage tax shelters. The federal income tax, many state income taxes, and the unified gift-estate tax are progressive taxes. Compare regressive tax.