Which tax is considered progressive in nature?

A progressive tax is one where the tax rate increases as the taxable amount increases. This means that individuals or entities with higher incomes pay a larger percentage in taxes compared to those with lower incomes, promoting equity in the tax system.

Income tax fits this definition perfectly. In many tax systems, income tax is structured with different tax brackets; as one earns more, not only does the individual pay more in total dollars, but also a higher percentage of their income. This structure is designed to ensure that those who have the ability to pay more, contribute a fairer share to government revenues.

In contrast, sales tax, property tax, and excise tax tend to be regressive or flat taxes, where everyone pays the same rate regardless of their income level, which can disproportionately impact lower-income individuals. Therefore, income tax is the only option among the choices that aligns with the principles of a progressive tax system.