Distinction between a Tax and Fee

Tax imposed as common burden while fee provides special benefit or privilege to individuals

The Supreme Court established the primary distinction between tax and fee in a landmark case. A tax is imposed as part of a common burden on citizens, while a fee is payment for a special benefit or privilege. Fees confer special capacity to individuals, such as registration fees for documents or marriage licenses, where the special advantage is secondary to regulatory purposes in public interest. The key differentiator is that fees provide specific benefits to individuals, whereas any particular advantage from taxes is merely incidental to state action.