Tax Liability

Tax Liability refers to the total amount of tax that an individual or business is legally obligated to pay to the taxing authority, typically based on their income, profits, or property.

Tax liability can arise from various sources, including income tax, corporate tax, sales tax, and property tax.

For example, if an individual earns $50,000 in a year and falls into a tax bracket with a 20% tax rate, their tax liability would be $10,000. Similarly, a corporation with taxable income of $1,000,000 at a 21% corporate tax rate would have a tax liability of $210,000.

Tax liabilities can be reduced through deductions, credits, and exemptions, which lower the taxable income and, consequently, the amount owed.