Taxes are the most significant and abundant public revenue compulsorily collected by the state from citizens and legal entities in order to enable financing of public expenditures, with the objective of creating a dignified and high quality of life for all citizens. Income tax is classified as a direct tax and is considered the most complex, significant and personal form of taxation. The method of taxation of citizens and legal entities, proportional, regressive or progressive, especially in income taxation, is a topic that presently and subsequently brings a multitude of ambiguous responses and differing opinions. However, in Republic of Croatia, it is evident that the tax policy does not provide positive results for citizens or legal entities. Political objectives in the Republic of Croatia focus on the taxation of parts of income intended for consumption, while parts of income intended for investment and savings are almost exempt from taxation. The tax reform initiated at the beginning of 2024 should have been based on the goal of raising the standard of living of citizens, especially of those with the lowest income whose real purchasing power has been reduced by inflation, on strengthening the fiscal autonomy of municipalities and cities, and on preserving economic growth. When speaking of income tax, this reform was not positive. In the theoretical part of this thesis will present the sources and types of income, and explaining the income tax system, methods of taxation and the application of taxation tax rates. In the empirical part of this thesis, an analysis is conducted on the revenue generated by the state from income tax according to different types of income.