Income tax is a government levy imposed on the earnings of individuals and businesses. It is calculated based on the amount of money earned during a specific period, usually a year. The tax rate can vary depending on the income level, with higher earners typically paying a larger percentage. Governments use the revenue generated from income tax to fund public services such as education, healthcare, and infrastructure. Taxpayers are required to file their income tax returns annually, reporting their earnings and any deductions or credits they may qualify for to reduce their tax liability.