> For the complete documentation index, see [llms.txt](https://docs.thumb.meme/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.thumb.meme/token-types/tax-token.md). # Tax Token A Tax Token charges a predefined fee on token transactions and distributes the collected fees according to predefined on-chain rules. The transaction tax applies during both the internal Bonding Curve market and external DEX trading after Graduation. ### Available Tax Rates * 1% * 3% * 5% * 10% ### Tax Allocation * **Funds Recipient Wallet:** Used for the project treasury, operations or another designated purpose. * **Holder Rewards:** Distributed to eligible token holders. * **Token Burn:** Permanently removes tokens from circulation. * **Liquidity:** Adds funds to token liquidity after Graduation. All allocation percentages must add up to 100%. ### When Tax Allocations Take Effect * The transaction tax applies to both Bonding Curve trading and external DEX trading. * Funds recipient, holder rewards and token burn allocations can take effect during the Bonding Curve stage. * Liquidity allocation is executed only after the token enters external DEX trading. ### Holder Reward Rules * A wallet must hold at least 10,000 tokens to qualify for holder rewards. * When an individual user's accumulated rewards reach 10 U, the amount becomes available to claim. * When the total pending rewards for a token reach 100 U, the dividend airdrop is triggered. ### How Does a Tax Token Work? 1. The creator selects Tax Token during the launch process. 2. The creator selects the transaction tax rate. 3. The creator configures the allocation methods and percentages. 4. The smart contract automatically collects the applicable fee when users trade. 5. Collected fees are processed according to the configured rules and the token's current trading stage. The tax rate, allocation structure and recipient addresses will be displayed on the token detail page. > **Tax Token risk notice:** Tax Tokens increase the effective cost of trading and may affect token prices, liquidity and the overall trading experience. Users should review the tax rate, allocation structure, recipient addresses, holder reward requirements and relevant permissions before trading. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://docs.thumb.meme/token-types/tax-token.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.