Income tax is a type of tax that governments impose on individuals and businesses based on their earnings. This tax is usually calculated as a percentage of the income earned during a specific period, typically a year. The money collected from income tax is used to fund public services such as education, healthcare, and infrastructure. In many countries, income tax rates can vary depending on the amount of income earned, with higher earners often paying a larger percentage. Taxpayers are required to file tax returns, which report their income and calculate the amount owed or any refund due.