From Longman Business Dictionaryfederal taxˌfederal ˈtax [countable, uncountable]TAX in the US, tax paid to the Internal Revenue Service or to the Bureau of Customs rather than to local tax authorities. INCOME TAX, ESTATE TAX, and EXCISE TAX are all federal taxesAt the President’s order, big employers are taking less money out of their workers’ paychecks for federal taxes. → tax