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How Much Do Americans Pay in Income Taxes?

by Ian Smith |

A recent report by the Tax Foundation found that the average federal tax rate for all taxpayers in 2010 rose slightly over the previous year.

The new analysis is based on new individual income tax data from the Internal Revenue Service covering calendar year 2010.

Taxes have been a prominent issue recently with debates in Congress over what to do about the “fiscal cliff” in 2013, so the Tax Foundation’s analysis of the new data is timely. Republicans have argued against raising taxes while Democrats say that taxes should be increased on high income earners.

According to the study, the average federal tax rate for all taxpayers rose slightly to 11.81 percent, up from 11.06 percent in 2009, and the average tax rates increased in 2010 for all except the top 1 percent, who saw a slight decrease from 24.05 percent of income in 2009 to 23.39 percent in 2010. This is about 10 times the tax rate of the bottom 50 percent of filers.

Average tax returns in 2010 break down as follows:

Summary of Federal Income Tax Data, 2010
Number of Returns* AGI ($ millions) Income Taxes Paid ($ millions) Group’s Share of Total AGI Group’s Share of Income Taxes Income Split Point Average Tax Rate
All Taxpayers 135,033,492 $8,039,779 $949,144 100.0% 100.0% - 11.81%
Top 1% 1,350,335 $1,517,146 $354,810 18.9% 37.4% $369,691 23.39%
1-5% 5,401,340 $1,199,053 $205,839 14.9% 21.7% 17.17%
Top 5% 6,751,675 $2,716,199 $560,649 33.8% 59.1% $161,579 20.64%
5-10% 6,751,674 $915,165 $109,670 11.4% 11.6% 11.98%
Top 10% 13,503,349 $3,631,364 $670,319 45.2% 70.6% $116,623 18.46%
10-25% 20,255,024 $1,799,588 $156,477 22.4% 16.5% 8.70%
Top 25% 33,758,373 $5,430,952 $826,796 67.6% 87.1% $69,126 15.22%
25-50% 33,758,373 $1,664,728 $99,986 20.7% 10.5% 6.01%
Top 50% 67,516,746 $7,095,680 $926,782 88.3% 97.6% $34,338 13.06%
Bottom 50% 67,516,746 $944,099 $22,363 11.7% 2.4% <$34,338 2.37%
Source: Internal Revenue Service
*Does not include dependent filers.

Tax rates for all filers have dropped since 2001, but have done so the most for low-income households. The bottom 50 percent of filers paid 4.92 percent of their income in 2001, more than twice the rate they paid in 2010. In contrast, the top 1 percent of filers paid 27.6 percent of their income in 2001, which is about 4 points higher than their 2010 rate.

“Incomes have stagnated for low-income households in recent years, but this is true for high-income households as well,” said Tax Foundation chief economist William McBride. “In inflation-adjusted terms, the income thresholds for all groups – including the top 50 percent, the top 1 percent, and the top 0.1 percent – are lower than they were in 2001.”

The full report provides more in depth analysis and numerous tables displaying different data sets dating as far back as 1980 in some cases.

© 2014 FedSmith Inc. All rights reserved. This copyrighted article may not be reproduced without express written consent of FedSmith Inc.

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Ian Smith

Ian Smith is one of the founders of FedSmith.com. He writes about current topics that impact federal employees.

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