DEFINITION of 'Surtax'

A tax levied on top of another tax. A surtax can be calculated as a percentage of a certain amount or it can be a flat dollar amount. A surtax is generally assessed to fund a specific government program, whereas regular income or sales taxes are used to fund a variety of programs. Thus, one unique feature of a surtax is that it allows taxpayers to more easily see how much money the government is collecting and spending for a particular program.


For example, in 1968, President Johnson enacted a 10% surtax on individual and corporate income to help pay for the cost of fighting the Vietnam War. While most taxpayers probably did not know what percentage of their tax dollars were going toward military spending, they could easily see how much extra money they were being asked to contribute specifically to the war effort.

  1. Income Tax

    A tax that governments impose on financial income generated by ...
  2. Direct Tax

    A tax that is paid directly by an individual or organization ...
  3. Indirect Tax

    A tax that increases the price of a good so that consumers are ...
  4. Surcharge

    A fee or other charge that is added to the cost of a good or ...
  5. Corporate Tax

    A levy placed on the profit of a firm, with different rates used ...
  6. Self-Employment Tax

    Money that a small business owner must pay to the federal government ...
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