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Tax Breaks

Where You Rank as a Taxpayer

As Congress finally gets serious about tax reform, you need to know where you stand now, so you can understand how changes will affect your pocketbook.

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President Donald Trump promises “a giant, beautiful, massive — the biggest ever in our country — tax cut.” And now, almost a year to the day after Trump was elected, Kevin Brady, chairman of the House Ways and Means Committee, promises to unveil this week not a theory, not a fever dream, not an outline, not a framework but honest-to-God legislative language on what tax reform might look like.

SLIDE SHOW: 9 Tax Breaks for the Middle Class

Cue the ominous musical background of lobbyists gathering ... and dust off the quote attributed (probably wrongly) to 19th century German Chancellor Otto von Bismarck: “Laws are like sausages: You should never watch them being made.”

But, you know you have to watch.

Which cherished tax breaks will be sacrificed on the altar of tax reform? Will manipulating the tax brackets help or hurt your bottom line? Will you come out ahead if doubling the standard deduction comes at the cost of eliminating all personal exemptions? What are they going to do to your 401(k)? Will cutting corporate taxes really put $4,000 in the average family’s pocket?

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It’s still too early to know whether the latest sausage-making in Washington will leave you a winner or a loser. But it’s not too early to know where you stand now. No matter how “rich” or “poor” or “middle class” you are, are you bearing your “fair share” of the nation's tax burden today? Do you have the faintest idea what portion you pay now ... beyond a gnawing feeling that it’s too darn much?

To help answer such questions, we just updated our tool that shows how the nation's income and federal income tax bill are distributed among its citizens. Our tool uses the latest IRS data to shine a bright light into what too often are murky shadows.

We’ll also show you how your own income stacks up with that of your fellow Americans.

Are you ready to see where you fit in? With our simple calculator, enter a single number from your latest tax return, and you’ll instantly know the answer.

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During the presidential campaign last year, here’s what we learned when we plugged in Hillary Clinton’s number into the calculator. Her $10,594,529 adjusted gross income (AGI) puts her in the top 1% of earners. Altogether, the top-earning 1% of taxpayers reported 20.6% of all AGI and paid 39.5% of total income taxes.

Since President Trump hasn’t released his tax returns, we couldn’t check up on him.

But if you filed a return, our calculator will show where you fit in.

A look at the big picture

The latest numbers from the IRS — based on data from 2015 tax returns — show what it takes to be among the top 1% of income earners: At least $480,930 of adjusted gross income. That’s about $15,000 more than it took to buy into this rarified status a year earlier. The 1.4 million Americans with this elite status reported 20.7% of the total adjusted gross income reported on 2015 returns.

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That's right. One percent of taxpayers reported one-fifth of all income. And that same tiny group kicked in almost 40% of all the federal income taxes paid.

How much do you need to make to be in the top 50% of earners? Just $39,275.

Fall below that level, and you are in the bottom half, along with about 71 million of your fellow taxpayers. All told, the lower-earning half of all taxpayers earned just 11.3% of the AGI reported on 2015 federal returns. And they paid 2.8% of all the income taxes paid.

Use our calculator to see if you’re in the top 1%, 5%, 10%, 25%, 50% ... or bottom 50%. As lawmakers in Washington argue over what tax rates should apply in the future, a new feature of our calculator this year will show the average tax rate for taxpayers in each income category.

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Our income and tax-burden breakdowns come from information reported on 2015 individual income tax returns. Income categories are based on adjusted gross income, which is basically income from taxable sources minus certain deductions—including deductible contributions to IRA, alimony paid and student loan interest—but before subtracting the value of exemptions and either the standard or itemized deductions.

Income Category 2015 AGI Percent of All Income Percent of Income Taxes Paid
Top 1% Over $480,930 20.7% 39.0%
Top 5% Over $195,778 36.1% 59.6%
Top 10% Over $138,031 47.4% 70.6%
Top 25% Over $79,665 69.0% 86.6%
Top 50% Over $39,275 88.7% 97.2%
Bottom 50% Below $39,275 11.3% 2.8%

Source: Internal Revenue Service data

(Note that these figures include only federal income taxes. According to one study, more than half of all wage earners pay more in Social Security and Medicare taxes than they do income tax. The percentage of those paying more of these payroll taxes than income tax soars to nearly 90% if you count both the employer and employee share of those levies.)