The distinction between the Levites and the priests can be hard to keep track of. Even though the words are not used interchangeably (that I can tell), sometimes they’re used so close together that it feels confusing. Phrases like “Levitical Priests” (Deuteronomy 17:9) don’t help at all.
In the end though, we need to remember that while all priests are Levites, not all Levites are priests. One is a subset of the other (kind of like how all squares are rectangles, but not all rectangles are squares, or whatever the saying is).
That delineation is important in passages like Numbers 18:25-32 that talk about the “tithe of the tithe.” On the surface, this seems like a circular commandment: Take a tenth from the people, then take another tenth from that to offer to the Lord.
The problem with that is most of the tithe ends up in the hands of the priests anyways. That’s what Numbers 18:21-24 discusses—the tithe is a gift for the Levites as payment for their work in the tabernacle.
Practically speaking then, how would that work? If the priests are already taking a tenth from the people as payment, why would they then take another tenth from themselves?
The answer lies in the hierarchy mentioned above. The Levites are the ones taking a tenth from the people for their work. That includes the Kohathites, Merarites, and the Gershonites, all of whom work near the Tabernacle but not in the Tabernacle.
Of that tenth, the priests—the ones who actually perform the sacrifices—take their tenth. That’s the tithe of the tithe, or the “tenth of the tenth.” The Levites take the tithe from the people, and the priests take the tithe from the Levites.
This specific allotment is also described as the best of the best. If the tithe is already supposed to come from the best that the people have to offer (Exodus 23:19), then the tithe of the tithe is the best from that group (Numbers 18:29-30).
This arrangement seems like it could attract quite a bit of jealousy between the Levites and the priests, but to my knowledge, we don’t see any kind of strife between the two groups (outside of Korah). It seems everyone was content with their station.
It also highlights the need for everyone to give to the Lord, not just the everyday people. Just because the Levites receive a tenth from Israel doesn’t mean they’re exempt from their own tithe. They need to pay their taxes too, just like everybody else.