As household income increases, the IRS data shows that average income tax rates rise. The bottom 50 percent of taxpayers (taxpayers with AGIs below $40,078) faced an average income tax rate of 3.7 percent. The 2016 IRS data shows that taxpayers with higher incomes pay much higher average income tax rates than lower-income taxpayers. Subscribe High-Income Taxpayers Paid the Highest Average Income Tax Rates Subscribe to get insights from our trusted experts delivered straight to your inbox. Stay informed on the tax policies impacting you. The top 1 percent of taxpayers paid roughly $538 billion, or 37.3 percent of all income taxes, while the bottom 90 percent paid about $440 billion, or 30.5 percent of all income taxes. In 2016, the top 1 percent of taxpayers accounted for more income taxes paid than the bottom 90 percent combined. In contrast, the top 1 percent of all taxpayers (taxpayers with AGI of $480,804 and above), earned 19.7 percent of all AGI in 2016, and paid 37.3 percent of all federal income taxes. This group of taxpayers paid $43.9 billion in taxes, or roughly 3 percent of all income taxes in 2016. In 2016, the bottom 50 percent of taxpayers (those with AGI below $40,078) earned 11.6 percent of total AGI. High-Income Taxpayers Paid Majority of Federal Income Taxes Source: IRS, Statistics of Income, Individual Income Rates and Tax Shares (2018). “Income split point” is the minimum AGI for tax returns to fall into each percentile. Table 1: Summary of Federal Income Tax Data, 2016 Note: Table does not include dependent filers. The share of income earned by the top 1 percent fell slightly from 20.7 percent of AGI in 2015 to 19.7 percent in 2016, and the share of the income tax burden for the top 1 percent fell slightly as well, from 39 percent in 2015 to 37.3 percent in 2016. The average individual income tax rate for all taxpayers fell slightly, from 14.3 percent to 14.2 percent, and the average tax rate fell for all groups. Taxes paid fell slightly to $1.4 trillion for all taxpayers in 2016, a 0.8 percent decrease from the previous year. There were 316,000 fewer tax returns filed in 2016 than in 2015, meaning that average AGI rose by $260 per return, or 0.4 percent. Total AGI grew $14 billion from 2015 levels, less than the $434 billion increase from 2014 to 2015. Taxpayers reported $10.2 trillion in adjusted gross income (AGI) on 140.9 million tax returns in 2016. Reported Income Increased and Taxes Paid Decreased in 2016 The top 1 percent of taxpayers paid a 26.9 percent individual income tax rate, which is more than seven times higher than taxpayers in the bottom 50 percent (3.7 percent).The top 1 percent paid a greater share of individual income taxes (37.3 percent) than the bottom 90 percent combined (30.5 percent).In 2016, the top 50 percent of all taxpayers paid 97 percent of all individual income taxes, while the bottom 50 percent paid the remaining 3 percent.Their share of federal individual income taxes fell slightly, to 37.3 percent. The share of reported income earned by the top 1 percent of taxpayers fell slightly to 19.7 percent in 2016.In 2016, 140.9 million taxpayers reported earning $10.2 trillion in adjusted gross income and paid $1.4 trillion in individual income taxes.individual income tax continues to be very progressive, borne primarily by the highest income earners. The Internal Revenue Service (IRS) has recently released new data on individual income taxes for tax year 2016, showing the number of taxpayers, adjusted gross income, and income tax shares by income percentiles.
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