Income taxes usually are taxes on the activities of the corporation which generate profit. Very generally, allowable expenses (such as the cost of salaries) and other permitted deductions (such as a measure of the depreciation of capital assets) are subtracted from the revenues (such as sales) in arriving at the amount that is subject to taxation. The state would then take a portion of that amount.

It will depend on the circumstances if any amounts (such as dividends) that are distributed to the owners are deducted for the purposes of determining the corporations taxes. Some entities such as trusts or a special corperation, such as an "S" corporation in the United States, permit the flow-through of the corporation's income to the owner. This income is then taxed in the hands of the owner but not in the hands of the corporation. If there is no flow through of this income, this income is generally taxed twice, once in the hands of the corporation and secondly when this income is received by the owner, for example, as personal income tax on dividends when received by an individual.

Tax law is a branch of law that encompasses a number of different matters regarding how the state taxes citizens and so forth. What is interesting about tax law is how complex it is. The complexity arises as the state uses tax law as a means of social engineering. In other words, the state uses tax law to encourage certain behavior and to discourage certain other behavior.

Further, each level of government has its own revenue requirements and its own social agenda.

Taxes arise at the federal, state and local levels. Taxes are usually based on some activity or circumstance. These include in respect to net worth (wealth tax), the ownership of a home (property tax), the earning of income (income tax), the sale of property (capital gains tax), the purchase of goods or services (sales tax), switching homes (land transfer tax), movement (fuel surcharges), the storing of information (blank media tax), the transporation of goods (import taxes), the giving of goods and services (gift taxes), dying (succession tax) and having fun (sin tax on alcohol, for instance). Merely being in conflict with the state can give rise to tax (expropriation). Some jurisdictions have taxes that arise merely if one is alive, a head or capitation tax (while often behind a tax is a social agenda to reduce a particular activity, such as the case with sin taxes, we are sure that is not the case with this tax!!).

As well, taxes can depend on legal status, such as being an individual, a corporation or having a family (the additional tax burden that arises if the family decides to raise the children itself).