A tax policy is a framework established by the government to regulate how taxes are levied and collected from individuals and businesses. It determines tax rates, establishes exemptions, and outlines the methods of taxation, such as income, sales, and property taxes. Tax policies are crucial for generating revenue to fund public services, infrastructure, and various governmental functions. Additionally, effective tax policies can stimulate economic growth or redistribute wealth. Policymakers often adjust taxation strategies to address economic challenges and promote fairness within the economic system.