Please enable JavaScript to view the comments powered by Disqus.

Tax Breaks

Where You Rank as a Taxpayer

Do the rich pay their fair share of taxes? How about you? Our handy tool will help you answer these questions.

iStockphoto

The 2020 presidential race has begun, and it sure looks like tax inequality is going to be one of the big campaign issues

SLIDE SHOW: The Most-Overlooked Tax Breaks and Deductions

Some Democrats seeking the 2020 nomination and others on the left are already talking about taxing the rich more heavily. For instance, there’s Sen. Elizabeth Warren’s “wealth tax”, Rep. Alexandria Ocasio-Cortez’s proposed 70% top rate and Sen. Bernie Sanders’ bill to increase the estate tax. On the other side, President Trump will point to those parts of the 2017 tax reform that help many middle- and lower-income taxpayers, such as supersizing the standard deduction, doubling the child tax credit, and lower rates across the board. Before casting your ballot, you’ll have to decide for yourself if our tax system is “fair” and whether some groups should pay more (or less) in taxes.

Then there’s your own situation. No matter how “rich” or “poor” or “middle class” you are, are you bearing your “fair share” of the nation’s tax burden? Do you have the faintest idea what portion you pay ... beyond a gnawing feeling that it’s too darn much?

To help answer your questions about tax equality, we created a tool to show how the nation’s taxable income and the country’s federal income tax bill are distributed among its citizens. Our tool uses the latest IRS data to shine a bright light into what are too often murky shadows.

Advertisement

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

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

A look at the big picture

The latest numbers from the IRS—based on data from 2016 tax returns—show what it takes to be among the top 1% of income earners: At least $480,804 of adjusted gross income. That’s $126 less than it took to buy into this rarified status a year earlier. The 1.4 million returns reporting this elite income status accounted for 19.7% of the total adjusted gross income reported on 2016 returns.

That’s right. One percent of taxpayers reported one-fifth of all income. And that same tiny group kicked in almost 37% of all the federal income taxes paid.

Advertisement

How much do you need to make to be in the top 50% of earners? Just $40,078.

Fall below that level, and you are in the bottom half, along with about 70 million of your fellow taxpayers. All told, that group earned just 11.6% of the AGI reported on 2016 federal returns. And they paid 3% of all the income taxes paid.

Use our calculator to see if you’re in the top 1%, 5%, 10%, 25% or 50% . . . or the bottom 50% of income earners.

Our income and tax-burden breakdowns come from information reported on 2016 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 IRAs, alimony paid and student loan interest—but before subtracting the value of exemptions (before the 2018 tax year) and either the standard or itemized deduction.

Advertisement
Income Category 2016 AGI Percent of All Income Percent of Income Taxes Paid
Top 1% Over $480,804 19.7% 37.2%
Top 5% Over $197,651 35.2% 58.2%
Top 10% Over $139,713 46.6% 69.5%
Top 25% Over $80,921 68.4% 86.0%
Top 50% Over $40,078 88.4% 97.0%
Bottom 50% Below $40,078 11.6% 3.0%

Source: Internal Revenue Service data

(Note that these figures include only federal income taxes. According to Treasury Department estimates, most wage earners will pay more in payroll taxes—Social Security, Medicare and unemployment taxes—than they do in income taxes.)

SLIDE SHOW: 18 Red Flags for IRS Auditors