The federal government generated $4.47 trillion in revenue in fiscal year 2023, nearly half of which came from taxing people on their incomes. Individual income taxes in FY 2023 totaled $2.18 trillion, or $6,499 per person.
How much income tax do the top earners pay?
Most of the government’s federal income tax revenue comes from the nation’s top income earners. In 2021, the top 5% of earners — people with incomes $252,840 and above — collectively paid over $1.4 trillion in income taxes, or about 66% of the national total. If you include the top 10% — everyone who made at least $169,800 — that figure rises to $1.7 trillion, or 76% of the total.
The top 50% of earners contributed 97.7% of federal income tax revenue.
Of course, people are taxed on more than their income. They also pay into Social Security and Medicare through payroll taxes. Plus, they’re subject to state, local, and sales taxes.
What types of income are taxed?
Taxable income includes:
- Wages, salaries, and employee benefits
- Rental income
- Goods or services sold or bartered
- Royalties (e.g. from copyrights and patents)
- Business entities
- Capital gains (e.g. stocks and bonds)
- Digital assets (e.g. cryptocurrency)
- Government benefits (e.g. unemployment, Social Security)
- Tax refunds, reimbursem*nts, and rebates
- Court awards and damages
- Gambling winnings
- Prizes and awards
What are the income tax rates for different income brackets?
Individual taxpayers are taxed a percentage of their income, and that percentage depends on how much money they make in a year.
These taxes are paid on the portions in each tax bracket. For instance, a single earner with a total income of $100,000 would pay 10% on $11,600, 12% on the next $35,550 (bringing them to $47,150), and then 22% on the remaining $52,850.
Taxpayers may adjust the amount owed to the Internal Revenue Service for any applicable deductions or credits.
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SOI tax stats: individual statistical tables by tax rate and income percentile
Last updated
February 1, 2024
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The highest-earning Americans pay the most in combined federal, state and local taxes, the Tax Foundation noted. As a group, the top quintile — those earning $130,001 or more annually — paid $3.23 trillion in taxes, compared with $142 billion for the bottom quintile, or those earning less than $25,000.
Who paid the most tax? ›
Originally from Moscow, financial trader Alex Gerko topped the index, followed by former Formula 1 chief executive Bernie Ecclestone, while the boss of gambling firm Bet365, Denise Coates, came in third. Mr Ecclestone is a new entry after paying £650m in tax and penalties to HMRC to avoid jail.
Did people really pay 90% income tax? ›
The top income tax rate reached above 90% from 1944 through 1963, peaking in 1944, when top taxpayers paid an income tax rate of 94% on their taxable income. Starting in 1964, a period of income tax rate decline began, ending in 1987.
Who pays income taxes on Quizlet? ›
In the United States, both businesses and individuals pay income taxes and must file income tax returns each year.
Who pays 97% of all federal income taxes? ›
The top 50 percent of all taxpayers paid 97.7 percent of all federal individual income taxes, while the bottom 50 percent paid the remaining 2.3 percent.
Who is the highest tax payer? ›
Top 10 highest tax-paying companies in India for FY 2023
| Rank | Company Name | Tax Paid (in Rupees, Crores) |
|---|
| 1 | Reliance Industries Limited | ₹20,713 cr |
| 2 | State Bank of India | ₹17,649 cr |
| 3 | HDFC Bank | ₹15,350 cr |
| 4 | Tata Consultancy Services (TCS) | ₹14,604 cr |
6 more rowsSep 11, 2024
California has the highest individual income tax burden, while seven states (including Texas, Florida, and Washington) have the lowest. Washington has the highest sales and excise tax burden, while New Hampshire has the lowest. Red states have a lower tax burden than blue states, on average.
Who are the top 1% of taxpayers? ›
The top 1% of taxpayers — those who earn $561,351 or more — paid 42.3% of the total tax revenue collected in 2020, according to the latest figures from the IRS. In fact, the top 1% of taxpayers paid more income taxes than the bottom 90% all together.
Who pays highest taxes in world? ›
Ivory Coast
Ivory Coast has one of the highest tax rates in the world, with a top individual income tax rate of 60%. This high rate is part of the country's efforts to fund public services and infrastructure.
What president started income tax? ›
1862 - President Lincoln signed into law a revenue-raising measure to help pay for Civil War expenses. The measure created a Commissioner of Internal Revenue and the nation's first income tax. It levied a 3 percent tax on incomes between $600 and $10,000 and a 5 percent tax on incomes of more than $10,000.
At first, the income tax was incrementally expanded by the Congress of the United States, and then inflation automatically raised most persons into tax brackets formerly reserved for the wealthy until income tax brackets were adjusted for inflation.
How did the rich get out of paying taxes? ›
Wealthy family buys stocks, bonds, real estate, art, or other high-value assets. It strategically holds on to these assets and allows them to grow in value. The family won't owe income tax on the growth in the assets' value unless it sells them and makes a profit.
Who doesn't pay taxes in the US? ›
Who Does Not Have to Pay Taxes? You generally don't have to pay taxes if your income is less than the standard deduction or the total of your itemized deductions, if you have a certain number of dependents, if you work abroad and are below the required thresholds, or if you're a qualifying non-profit organization.
Who is responsible for taxes besides the president? ›
Article I, Section 8, Clause 1: The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; . . .
What is the largest source of government revenue in the United States? ›
Does the middle class pay more taxes? ›
What does impact your finances are federal tax brackets and there are seven of them. The lowest tax bracket is 10%. The highest tax bracket is 37%. If you're in the middle class, you're probably in the 22%, 24% or possibly 32% tax brackets.
Who has the highest income tax in the world? ›
The long-troubled West African country, Ivory Coast, has the highest income tax rate in the world. People living there are giving away a whopping 60% of their income to the government.
Why do the rich pay less taxes? ›
In contrast to the 99% who earn most of their income from wages and salaries, the top 1% earn most of their income from investments. From work, they may receive deferred compensation, stock or stock options, and other benefits that aren't taxable right away.
