We pay federal income taxes, state income taxes, Social Security and Medicare taxes, and sales taxes. Federal income tax is a progressive tax–that is, the more money you make, the higher percentage of your income you pay in taxes. State income tax rates vary from state to state, but are typically also progressive. Social Security and Medicare taxes are flat (everyone pays the same percentage of their income) and are taken out of your paycheck before you receive it. Sales taxes are also flat (everyone pays the same percentage of their purchase price) and are usually included in the price of whatever you’re buying.