direct tax

A direct tax is a tax levied directly on an individual or organization, rather than indirectly through a transaction. It is typically based on the taxpayer's ability to pay, often measured by income, consumption, or net worth. Unlike indirect taxes, such as sales tax, direct taxes are generally considered difficult for the taxpayer to shift to someone else.123

Common examples of direct taxes include individual income taxes, which are often progressive, meaning higher incomes are taxed at higher rates. Taxes on net worth, which assess the total value of assets minus liabilities, and taxes on consumption (expenditure taxes) are also forms of direct taxation. Taxes levied at death, like inheritance or estate taxes, are also direct taxes.2