negative income tax

noun
|Updated on: 13 Jun 2018

Definition of negative income tax

: a system of federal subsidy payments to families with incomes below a stipulated level

Recent Examples of negative income tax from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'negative income tax.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of negative income tax

1950

in the meaning defined above

See Words from the same year
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Financial Definition of NEGATIVE INCOME TAX

negative income tax

What It Is

Negative income tax refers to transfer payments given to families whose reported household income fall below a predetermined amount and qualifies them for a supplemental payment from the government.

How It Works

For families whose household income qualifies as insufficient to fulfill their needs, the government provides a subsidy to help ensure their welfare. This assistance is referred to as a negative income tax because the payment schedule is reversed – the government pays the taxpayer.

[InvestingAnswers Feature: The Most Important Tax Changes to Know Before Filing Your Tax Return]

Why It Matters

It is not uncommon for American families to generate a household income which entitles them to pay little or no tax. In certain cases, many families report a level of income so low that tax law stipulates that the government provide them with financial assistance in order to ensure that their needs are met adequately.

[InvestingAnswers Feature: How to Avoid an IRS Audit]


Seen and Heard

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