Taxes

Taxes may be collected every week from the populace of your fiefs. In Mount&Blade, taxes accumulate so you don't have to visit every week. Warband improved on tax collection by removing the need to visit at all, as you automatically receive taxes along with your weekly payments.

Base income

Towns earn the most base taxes, villages and castles earn less.

Fief type	Base income /	Base income
Towns	2400	1000
Castles	1200	250
Villages	1200	500

Variables

The prosperity of each fief also affects the amount of taxes they produce. You can raise the prosperity of a town by making sure that its caravans reach their destinations, and by completing quests from its Guild Master. For villages, stop them from being raided, kill bandits if they do invade, build improvements, and complete quests given by the Village Elders. Also, when repeatedly purchasing imported goods from a town or village, the prosperity will eventually drop due to the lack of these goods. The import items will no longer be available until caravans have returned them, which can take a rather long time.

Efficiency

Tax efficiency is unaffected by bandits, raiding, or looting. It is instead a property of how many fiefs you personally own, and the exact scale depends on the campaign difficulty level chosen. When the campaign AI is set to "poor", you can hold 6 fiefs before tax inefficiency kicks in, and each fief increases inefficiency by 3%. When set to "average", you can hold 4 fiefs before the effect begins, with each fief adding 4%. With "good" campaign AI, you may only have 2 fiefs before you receive 5% inefficiency per extra fief. The maximum efficiency loss on any difficulty is 65%.

As a result of tax inefficiency, it is advisable once a strong economic basis is established (such as with Productive Enterprises), that you refuse villages and castles as fiefs (which often cost more than they're worth to defend anyway) and only accept towns. However, gaining towns often requires besieging them yourself and having high renown if you do not own your own kingdom.

alternat efficiency strategy:

if you plan to capture the entire map or a large part of it, you may considder to keep all fiefs to yourself.since the minimum tax efficiency is 35%, the more fiefs you have the more that 35% represents in actual taxes and at some point those taxes will be more than you can get from 2 to 6 fiefs at maximum efficiency.

the only reason, in that case, to have lords , is so that they can help 'police' your territory. if you give a lord only a single village, they will still magically be able to raise and support a 250 man army. this is very cheap and very helpfull. (When you give all your fiefs away you dont get more money, nomatter how much you grow your empire, than what you get from your 2 or 6 personal fiefs).

figure out a unit type that is cheap to maintain, but all have good/decent armor (all melee). and put 70/100 per fort and 150/200 per town. to keep the guard cost low. they are only there to hold out long enough for you to help them fight off a siege. the ai will hardly ever do sieges and the amount of time they do siege is very manageable.

again: this is only for when you plan to conquer a very large amount of fiefs or the entire map.

(basically you will need about 3 times as many fiefs that you could manage at 100% efficiency to get the same tax revenue, any fiefs that you get after that are pure 35% profit/fief compared to the 100% efficiency strategy)