1. The rate at which a business or person is taxed on income. 2. The rate of tax on good and services. 1. For example, consider an individual with an income tax rate of 30%. For every $100,000 that individual makes, $30,000 ($100,000 x 0.30) must be paid as tax. There are three main types of tax rates: progressive, proportional and regressive. 2. For example, (as of 2005) in New York State the state tax rate is 4.25%. If you buy a $1,000 television from a store, the total purchase price will be $1,042.50, with $42.50 in tax paid to the state of New York.