Similarities

• The two main national income taxes in the United States and the United Kingdom work in similar ways. Both countries use a progressive tax system, meaning that income is divided into brackets or thresholds. Each bracket has a specific tax rate: The higher the income bracket, the higher its rate. Only the proportion of income that falls within this bracket is subject to this rate, rather than the rate applying to a person's entire income. Both countries also have a limit known as a personal exemption or personal allowance: The income up to this limit is not taxed.
  
  

Rates

• The brackets and rates for both countries are published by their respective authorities--namely, the Internal Revenue Service (IRS) and Her Majesty's Customs & Exercise--as well as being widely available on finance-related websites. When you calculate tax rates, it's important to note that the income figures in both countries usually refer to taxable income, meaning the figure that is left after deducting the personal exemption or allowance.
  
  

Local Taxes

• Forty-three American states have a state income tax, each setting its own rate. In some cases payments toward this tax can then be deducted from taxable income when you calculate federal income tax liabilities. The United Kingdom does not have a local income tax system. Both countries have local taxes based on property values that are designed to fund local services.
  
  

Status

• The United States has differing bracket thresholds depending on whether a person is single, married but filing a separate return, married and filing a joint return, or a head of a household. The last-named category is only available to one person at an address, who must have at least one other relative in the household besides a spouse.
  
  As of 2010, the United Kingdom did not have separate tax brackets for single and married people (except for those aged 75 or older) although one of the parties in the coalition government had campaigned on such a policy in the most recent election. Those aged 65 or more get a higher personal allowance.
  
  The UK also has a tax credit system for low income taxpayers who have a child under the age of 16 or between 17 and 20 and in full-time education or training living with them.
  
  

Other Taxes

• The United States operates sales taxes on a state-by-state basis. Each state has its own rate (four states have no sales tax) and determines which goods are taxable. The tax is not included in the displayed price and is added at the point of sale.
  
  The United Kingdom operates its sales tax, known as Value Added Tax (VAT) nationally. The main rate is 17.5 percent, rising to 20 percent from 2011. Some goods and services, notably fuel, carry a 5 percent rate. Other goods carry a zero rate or are exempt: The difference is that zero rate goods must still be detailed in a company's VAT records whereas exempt goods are not.