Taxes
Taken as a whole, the federal tax system is progressive—people with higher incomes tend to face higher tax rates.
How much of their income do different households pay in federal taxes?
Your total federal tax rate is how much of your income you pay in income, payroll, excise, and other taxes. While certain types of taxes taxes burden low- and middle-income households more than households at the top, the overall effect of the tax system is equalizing.
Bottom 20%
Bottom 20% households pay 6.4% of their income in federal taxes.
Middle 20%
Households in the middle 20% pay 13.0% of their income in federal taxes.
Top 1%
Top 1% households pay 29.8% of their income in federal taxes.What about the top 0.1%?
Where do I fit in?Enter your household income to see where you fit in: Enter income
Source: Congressional Budget Office. Notes
Two of the most progressive taxes, the individual income tax and the corporate tax, account for a majority of federal tax revenue. But decades of corporate tax cuts and increases in payroll taxes, which are less progressive, have weakened the equalizing effect of the federal tax system.
Source: Congressional Budget Office. Notes
The share of federal revenue accounted for by more progressive sources has shrunk.
The corporate income tax is among the most-income-equalizing parts of the federal tax system. But it has shrunk in importance over time. It used to generate one-fifth of all federal revenue. Now it generates about 6%. At the same time, the payroll tax, which is not particularly progressive, has grown in importance.
Share of federal tax revenue, by source
| Income tax | Payroll tax | Corporate tax |
Excise tax | Estate / gift | Customs | Miscellaneous | |
|---|---|---|---|---|---|---|---|
| 1962 | 45.7% | 17.1% | 20.6% | 12.6% | 2.0% | 1.1% | 0.8% |
| 1963 | 44.7% | 18.6% | 20.3% | 12.4% | 2.0% | 1.1% | 1.0% |
| 1964 | 43.2% | 19.5% | 20.9% | 12.2% | 2.1% | 1.1% | 1.0% |
| 1965 | 41.8% | 19.0% | 21.8% | 12.5% | 2.3% | 1.2% | 1.4% |
| 1966 | 42.4% | 19.5% | 23.0% | 10.0% | 2.3% | 1.4% | 1.4% |
| 1967 | 41.3% | 21.9% | 22.8% | 9.2% | 2.0% | 1.3% | 1.4% |
| 1968 | 44.9% | 22.2% | 18.7% | 9.2% | 2.0% | 1.3% | 1.6% |
| 1969 | 46.7% | 20.9% | 19.6% | 8.1% | 1.9% | 1.2% | 1.6% |
| 1970 | 46.9% | 23.0% | 17.0% | 8.1% | 1.9% | 1.3% | 1.8% |
| 1971 | 46.1% | 25.3% | 14.3% | 8.9% | 2.0% | 1.4% | 2.1% |
| 1972 | 45.7% | 25.4% | 15.5% | 7.5% | 2.6% | 1.6% | 1.8% |
| 1973 | 44.7% | 27.3% | 15.7% | 7.0% | 2.1% | 1.4% | 1.7% |
| 1974 | 45.2% | 28.5% | 14.7% | 6.4% | 1.9% | 1.3% | 2.0% |
| 1975 | 43.9% | 30.3% | 14.6% | 5.9% | 1.7% | 1.3% | 2.4% |
| 1976 | 44.2% | 30.5% | 13.9% | 5.7% | 1.7% | 1.4% | 2.7% |
| 1977 | 44.3% | 29.9% | 15.4% | 4.9% | 2.1% | 1.4% | 1.8% |
| 1978 | 45.3% | 30.3% | 15.0% | 4.6% | 1.3% | 1.6% | 1.9% |
| 1979 | 47.0% | 30.0% | 14.2% | 4.0% | 1.2% | 1.6% | 2.0% |
| 1980 | 47.2% | 30.5% | 12.5% | 4.7% | 1.2% | 1.4% | 2.5% |
| 1981 | 47.7% | 30.5% | 10.2% | 6.8% | 1.1% | 1.3% | 2.3% |
| 1982 | 48.2% | 32.6% | 8.0% | 5.9% | 1.3% | 1.4% | 2.6% |
| 1983 | 48.1% | 34.8% | 6.2% | 5.9% | 1.0% | 1.4% | 2.6% |
| 1984 | 44.8% | 35.9% | 8.5% | 5.6% | 0.9% | 1.7% | 2.6% |
| 1985 | 45.6% | 36.1% | 8.4% | 4.9% | 0.9% | 1.6% | 2.5% |
| 1986 | 45.4% | 36.9% | 8.2% | 4.3% | 0.9% | 1.7% | 2.6% |
| 1987 | 46.0% | 35.5% | 9.8% | 3.8% | 0.9% | 1.8% | 2.3% |
| 1988 | 44.1% | 36.8% | 10.4% | 3.9% | 0.8% | 1.8% | 2.2% |
| 1989 | 45.0% | 36.3% | 10.4% | 3.5% | 0.9% | 1.6% | 2.3% |
| 1990 | 45.2% | 36.8% | 9.1% | 3.4% | 1.1% | 1.6% | 2.7% |
| 1991 | 44.3% | 37.5% | 9.3% | 4.0% | 1.1% | 1.5% | 2.2% |
| 1992 | 43.6% | 37.9% | 9.2% | 4.2% | 1.0% | 1.6% | 2.5% |
| 1993 | 44.2% | 37.1% | 10.2% | 4.2% | 1.1% | 1.6% | 1.7% |
| 1994 | 43.1% | 36.7% | 11.2% | 4.4% | 1.2% | 1.6% | 1.8% |
| 1995 | 43.7% | 35.8% | 11.6% | 4.3% | 1.1% | 1.4% | 2.1% |
| 1996 | 45.2% | 35.1% | 11.8% | 3.7% | 1.2% | 1.3% | 1.8% |
| 1997 | 46.7% | 34.2% | 11.5% | 3.6% | 1.3% | 1.1% | 1.6% |
| 1998 | 48.1% | 33.2% | 11.0% | 3.3% | 1.4% | 1.1% | 1.9% |
| 1999 | 48.1% | 33.5% | 10.1% | 3.9% | 1.5% | 1.0% | 1.9% |
| 2000 | 49.6% | 32.2% | 10.2% | 3.4% | 1.4% | 1.0% | 2.1% |
| 2001 | 49.9% | 34.9% | 7.6% | 3.3% | 1.4% | 1.0% | 1.9% |
| 2002 | 46.3% | 37.8% | 8.0% | 3.6% | 1.4% | 1.0% | 1.8% |
| 2003 | 44.5% | 40.0% | 7.4% | 3.8% | 1.2% | 1.1% | 1.9% |
| 2004 | 43.0% | 39.0% | 10.1% | 3.7% | 1.3% | 1.1% | 1.7% |
| 2005 | 43.1% | 36.9% | 12.9% | 3.4% | 1.1% | 1.1% | 1.5% |
| 2006 | 43.4% | 34.8% | 14.7% | 3.1% | 1.2% | 1.0% | 1.9% |
| 2007 | 45.3% | 33.9% | 14.4% | 2.5% | 1.0% | 1.0% | 1.9% |
| 2008 | 45.4% | 35.7% | 12.1% | 2.7% | 1.1% | 1.1% | 2.0% |
| 2009 | 43.5% | 42.3% | 6.6% | 3.0% | 1.1% | 1.1% | 2.5% |
| 2010 | 41.5% | 40.0% | 8.9% | 3.1% | 0.9% | 1.2% | 4.5% |
| 2011 | 47.4% | 35.5% | 7.9% | 3.1% | 0.3% | 1.3% | 4.5% |
| 2012 | 46.2% | 34.5% | 9.9% | 3.2% | 0.6% | 1.2% | 4.4% |
| 2013 | 47.4% | 34.2% | 9.9% | 3.0% | 0.7% | 1.1% | 3.7% |
| 2014 | 46.2% | 33.9% | 10.6% | 3.1% | 0.6% | 1.1% | 4.5% |
| 2015 | 47.4% | 32.8% | 10.6% | 3.0% | 0.6% | 1.1% | 4.5% |
| 2016 | 47.3% | 34.1% | 9.2% | 2.9% | 0.7% | 1.1% | 4.8% |
| 2017 | 47.9% | 35.0% | 9.0% | 2.5% | 0.7% | 1.0% | 3.9% |
| 2018 | 50.6% | 35.2% | 6.1% | 2.9% | 0.7% | 1.2% | 3.4% |
| 2019 | 49.6% | 35.9% | 6.6% | 2.9% | 0.5% | 2.0% | 2.4% |
| 2020 | 47.0% | 38.3% | 6.2% | 2.5% | 0.5% | 2.0% | 3.4% |
Congressional Budget Office, The Budget and Economic Outlook: 2021 to 2031 (July 2021).
Between 1979 and 2015, tax rates fell for all income groups.
Despite the shrinking share of federal revenue coming from progressive sources, the federal tax system overall is still a force for fighting inequality. The problem with that? We actually need a federal tax system that is becoming markedly more progressive to counteract any of the enormous rise in income inequality.
Average federal tax rates, by household income group
| Bottom 20% | 21–40th | Middle 20% | 61–80th | Top 1% | |
|---|---|---|---|---|---|
| 1980 | 11.7% | 15.8% | 19.5% | 21.7% | 31.9% |
| 1981 | 12.8% | 16.4% | 20.1% | 22.2% | 29.2% |
| 1982 | 12.6% | 15.3% | 18.7% | 20.6% | 25.8% |
| 1983 | 13.8% | 15.2% | 18.0% | 20.1% | 26.1% |
| 1984 | 14.6% | 16.0% | 18.6% | 20.2% | 26.2% |
| 1985 | 14.9% | 16.0% | 18.8% | 20.4% | 25.5% |
| 1986 | 14.5% | 16.1% | 18.8% | 20.5% | 24.2% |
| 1987 | 13.3% | 15.4% | 18.1% | 20.3% | 29.7% |
| 1988 | 13.1% | 15.7% | 18.6% | 20.7% | 28.4% |
| 1989 | 12.4% | 15.5% | 18.5% | 20.6% | 27.6% |
| 1990 | 13.8% | 16.2% | 18.6% | 20.6% | 27.4% |
| 1991 | 13.6% | 15.8% | 18.4% | 20.3% | 28.6% |
| 1992 | 13.3% | 15.6% | 18.0% | 20.1% | 29.3% |
| 1993 | 13.6% | 15.5% | 18.0% | 20.1% | 32.8% |
| 1994 | 12.2% | 15.2% | 18.1% | 20.4% | 34.0% |
| 1995 | 12.1% | 15.4% | 18.2% | 20.4% | 34.6% |
| 1996 | 11.6% | 15.3% | 18.2% | 20.3% | 34.6% |
| 1997 | 11.9% | 15.5% | 18.3% | 20.4% | 33.6% |
| 1998 | 11.3% | 14.9% | 17.7% | 20.3% | 32.2% |
| 1999 | 11.4% | 15.0% | 17.8% | 20.4% | 32.4% |
| 2000 | 10.8% | 15.0% | 17.6% | 20.4% | 32.0% |
| 2001 | 9.7% | 13.3% | 16.2% | 19.0% | 31.8% |
| 2002 | 9.4% | 12.7% | 15.6% | 18.2% | 31.6% |
| 2003 | 9.1% | 11.8% | 14.8% | 17.5% | 30.1% |
| 2004 | 8.9% | 12.1% | 15.0% | 17.6% | 29.8% |
| 2005 | 9.3% | 12.1% | 15.3% | 18.0% | 30.0% |
| 2006 | 9.6% | 12.4% | 15.2% | 18.0% | 29.7% |
| 2007 | 9.1% | 12.7% | 15.3% | 17.7% | 28.1% |
| 2008 | 5.4% | 9.4% | 12.7% | 15.7% | 27.8% |
| 2009 | 4.8% | 9.0% | 12.3% | 15.2% | 28.4% |
| 2010 | 5.5% | 9.3% | 12.7% | 15.5% | 29.0% |
| 2011 | 5.7% | 9.2% | 12.3% | 15.3% | 28.8% |
| 2012 | 5.8% | 9.4% | 12.6% | 15.6% | 28.4% |
| 2013 | 7.6% | 11.0% | 14.1% | 17.1% | 33.3% |
| 2014 | 7.9% | 11.1% | 14.3% | 17.5% | 33.3% |
| 2015 | 7.7% | 11.1% | 14.4% | 17.6% | 33.0% |
| 2016 | 7.9% | 11.3% | 14.3% | 17.4% | 32.8% |
| 2017 | 7.5% | 11.1% | 14.3% | 17.4% | 31.4% |
| 2018 | 6.4% | 9.8% | 13.0% | 16.3% | 29.8% |
Note: This tax rate is calculated by measuring how much in federal taxes you pay as a share of your pretax market income (earnings from work, capital gains, dividends, returns from owning a business, and rental income, after receiving benefits such as Social Security and unemployment payments). We rank households here by income after taxes and transfers.
Source: Congressional Budget Office, The Distribution of Household Income, 2018 (August 2020)
Supplemental data provided by the Congressional Budget Office with its release of The Distribution of Household Income, 2018 (August 2020). The tax rate is how much households pay in taxes as a share of pretax income (income after receiving benefits such as Social Security and unemployment payments but before paying taxes).
The U.S. taxes much less than other rich countries.
The U.S. ranks near the bottom among its peers in tax revenue as a share of GDP. Even if spending rises as fast as projected in scenarios with rapid health care cost growth, by 2048 the United States would still need to raise only as much in taxes as several other rich countries raise today.
Tax revenue as a share of GDP
Organisation for Economic Co-operation and Development (OECD), OECD.Stat online database, accessed April 2021. Data are for 2019. Total government revenue includes revenues accruing to all levels of government (for example local, state, and federal for the U.S.).