The Taxes That Hit an Individual Taxpayer (the ones I could think of… lol)

Want to make this clear before we start: So this post is not a “taxes are amazing” love letter.

This is an overview of the taxes that can hit regular humans, where you see them (paycheck vs tax return vs everyday life), and the basic reason they exist. 

TL;DR (for the emotionally taxed)

Most individuals run into:

• Income tax (federal + sometimes state): based on your income.
• Payroll taxes (Social Security + Medicare): based on earned wages.
• Self-employment tax: payroll taxes for people who don’t have an employer.
• Sales tax / property tax / excise taxes: paid in the background while you’re just trying to buy groceries and exist.

And then there are “surprise taxes” (AMT, NIIT) and “you broke the rules” taxes (retirement penalties, underpayment penalties).

The “Big 5” Most People Actually Pay

1) Federal Income Tax (Form 1040)

What it is: Tax on your taxable income (wages, business income, interest, some retirement income, etc.).
Where you see it: Withheld on your paycheck + reconciled on your tax return.
Why it exists: This is the federal government’s main “general funding” bucket — defense, courts, agencies, programs, etc.

This is the one people notice most because it’s visible and you’re forced to pay a person or a software company to create a bill on behalf of the government, then invoice your-self and then make the payment. 

2) State Income Tax (depends on your state)

What it is: Some states also tax income. (Texas doesn’t — which is why Texas tends to say “fine, we’ll get you another way,” and then property tax walks in like it owns the place.)
Where you see it: Paycheck withholding + state tax return (if your state has one).
Why it exists: Funds state-level budgets (schools, roads, public safety, state programs).

3) Social Security Tax (FICA)

What it is: Tax on wages that funds Social Security benefits (retirement, disability, survivor benefits).
Where you see it: Your paystub as Social Security withholding.
Why it exists: It’s essentially an insurance-style system where today’s workers fund today’s beneficiaries.

Important nuance: Your employer also pays a matching amount behind the scenes. So yes, your paycheck is being taxed… and your labor is being taxed again in the background. Fun!

4) Medicare Tax (FICA)

What it is: Tax on wages that funds Medicare health coverage (primarily age 65+ and certain disabilities).
Where you see it: Your paystub as Medicare withholding.
Why it exists: Same concept: funding a national health insurance program.

5) Self-Employment Tax (Schedule SE)

What it is: If you’re self-employed, you pay both sides of Social Security + Medicare (the employee side and the employer side), calculated on your net profit.
Where you see it: On your 1040 via Schedule SE (and related lines).
Why it exists: Same programs as FICA — you just don’t have an employer splitting the bill with you.

This is why freelancers get that April gut-punch. It’s not just “income tax.” It’s “income tax + payroll taxes you didn’t feel all year.”

The “Higher Income / More Complex” Taxes People Don’t Expect

6) Additional Medicare Tax

What it is: An extra Medicare tax that kicks in above certain income thresholds.
Where you see it: Sometimes in withholding, sometimes reconciled on the return.
Why it exists: More funding for Medicare from higher earners.

7) Net Investment Income Tax (NIIT)

What it is: Extra tax on certain investment income for higher-income taxpayers.
Where you see it: Your 1040 if you’re in NIIT territory.
Why it exists: Another “additional contribution” mechanism tied to Medicare funding.

Translation: If you’re doing well, the system may take a little extra from investment income too.

8) Alternative Minimum Tax (AMT)

What it is: A parallel tax calculation that can apply when certain deductions/income combinations get spicy.
Where you see it: It shows up as “AMT” on the return when it applies.
Why it exists: Originally designed to prevent very high-income taxpayers from using deductions/strategies to reduce tax too aggressively.

The “You Broke the Rules” Taxes (Penalty Taxes)

These feel like taxes because they are extra taxes added when you don’t follow rules attached to special benefits.

9) Early Retirement Withdrawal Penalties (and other retirement penalties)

What it is: Extra tax if you take retirement money early (with exceptions) or trigger certain retirement-account rules.
Where you see it: Often tied to Form 5329 and your 1040.
Why it exists: Retirement accounts got special tax benefits. Penalties discourage treating them like a casual ATM.

10) Excess Contribution Penalties (IRAs, HSAs, etc.)

What it is: Extra tax when you contribute more than allowed and don’t fix it in time.
Where you see it: On your return if it isn’t corrected properly.
Why it exists: Stops people from overstuffing tax-advantaged accounts beyond the legal limit.

11) Underpayment Penalty (Estimated Taxes / Withholding too low)

What it is: A penalty/interest-style charge if you didn’t pay enough during the year.
Where you see it: On your return when you owe it.
Why it exists: The U.S. tax system is “pay as you go.” This discourages people from waiting until April and dumping a giant payment.

The IRS wants consistent cash flow. You are basically on a payment plan you didn’t sign.

12) Failure-to-File / Failure-to-Pay Penalties + Interest

What it is: Add-ons for filing late or paying late.
Where you see it: On IRS notices or your account transcripts.
Why it exists: Compliance enforcement. Deadlines are how the machine runs.

Taxes You Pay as a Human… Even If They Don’t Show Up on Your 1040

13) Sales Tax

What it is: Tax on purchases.
Where you see it: At checkout, on receipts.
Why it exists: Major revenue source for states/localities. Easy to collect at the register.

14) Property Tax (Real Estate)

What it is: Annual tax based on the value of your home/land.
Where you see it: Mortgage escrow or a property tax bill.
Why it exists: Funds local services — schools, cities, counties, emergency services.

Texas note: No state income tax, but property tax often hits like a freight train wearing a smile.

15) Excise Taxes (Gas, tobacco, alcohol, etc.)

What it is: Taxes baked into the price of certain goods.
Where you see it: Mostly invisible unless you look it up.
Why it exists: Revenue + sometimes “discourage consumption” + sometimes to fund related infrastructure (gas taxes → roads, in theory).

“Wait… is that a tax?” (Not exactly, but it messes with your return)

16) Marketplace health insurance reconciliation (Premium Tax Credit)

What it is: Not a tax itself — but it can create a credit or a repayment on your tax return depending on your final income.
Where you see it: On your 1040 when you reconcile the credit.
Why it exists: The system estimates your subsidy during the year. Your tax return is where the government checks whether the estimate matched reality.

This one causes the most “WHY DO I OWE?” rage because people think it was “free.” It wasn’t free. It was advance-paid based on a guess.

Where do these taxes show up?

• Paycheck (W-2 workers): federal income tax withholding, state income tax withholding (if applicable), Social Security, Medicare
• Tax return (Form 1040): true-up of income tax, self-employment tax, Additional Medicare/NIIT (if applicable), AMT (if applicable), penalties (retirement/underpayment/etc.), Marketplace reconciliation
• Daily life (not on 1040 lines): sales tax, property tax, excise taxes

The point of this post

This isn’t about loving taxes. It’s about seeing them clearly.If you understand the categories, you stop thinking: “The IRS randomly decided to bully me this year.”

…and start thinking: “Oh. This is income tax + payroll tax + (maybe) self-employment tax + (maybe) a penalty because I didn’t pay throughout the year.”

And maybe join some protests to reduce taxes like the founding fathers and go back the Freedom, liberty, and the pursuit of happiness.

Benjamin Franklin’s line — “A Republic, if you can keep it” — isn’t a flex. It’s a warning label. Self-government isn’t a thing you “have.” It’s a thing you maintain. It highlights the fragility and ongoing effort required to maintain self-governance.

And money is power. Taxes are the fuel that makes government bigger, smaller, competent, incompetent, helpful, annoying — all of it. So when taxes rise, what’s really happening is this: more resources and decision-making move from individuals to governments and institutions.

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