Free invoice generator and tax tools for the United States

A small business in the United States meets four layers of tax. The IRS collects federal income tax: sole proprietors and single-member LLCs report profit on Schedule C of Form 1040, while corporations file their own return. Self-employed owners also pay self-employment tax of 15.3%, made up of 12.4% social security and 2.9% Medicare, calculated on Schedule SE. Estimated tax is paid in instalments during the year when $1,000 or more is expected to be owed at filing.

There is no federal VAT or federal sales tax. Consumption tax is a state and local sales tax, collected from the customer by the seller and paid to the state revenue department, with rates and exemptions that differ by state and sometimes by city.

Payroll brings federal income tax withholding, social security and Medicare (FICA) and federal unemployment tax (FUTA), deposited with the IRS, plus state unemployment and often state income tax withholding. The most recent federal reform is the One, Big, Beautiful Bill Act (Public Law 119-21, signed 4 July 2025), which amended the individual rate tables in section 1(j) and sets the 2026 standard deduction at $16,100 for single filers.