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Federal Tax Def is a tax that is levied by the U.S. federal government on individuals, corporations and on some commodities or services. It encompasses income tax, payroll tax, corporate tax and excise taxes. Programs that are funded by federal taxes globally include defense programs, Medicare, Social security, federal infrastructure and agencies. State and local taxes on the other hand finance local services such as schools, police and local roads. The taxation on the federal level is uniform throughout the country, whereas state and local taxes are different depending on the local legislation. The IRS is in charge of the collection and enforcement of federal tax.