Understanding Token Taxes (Buy and Sell Fees)

Some tokens take a cut of every buy and sell — a “tax” written into the contract. A small tax can be legitimate; a large or hidden one is often a trap.

What token taxes are

A percentage fee applied automatically on each trade, sent to the project, liquidity, or the deployer's wallet. You might pay it on buys, sells, or both.

When taxes are a red flag

• Very high taxes (e.g. 20%+) eat your money on every move.
• Asymmetric taxes — a low buy tax but a punishing sell tax — are a soft honeypot.
• Changeable taxes the owner can raise after you buy.
• Hidden taxes not disclosed anywhere.

How to check

Look at the contract or a token-tax checker before buying. If a token only trades with very high slippage, hidden taxes are often the reason.

Spot the danger early

ChainInspector Suite's sell / honeypot heuristic flags the price-and-volume patterns that high-tax and honeypot tokens produce.