Half of US Taxpayers Paid 97% of 2016 Federal Income Tax
Just ahead of the filing deadline for 2018 federal and state income taxes, the IRS published its roundup of 2016 income and taxes. Americans reported more than $10 trillion in income and paid about $1.4 trillion in federal taxes.
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
The U.S. Internal Revenue Service (IRS) reported Tuesday that for tax year 2016, the top 50% of U.S. taxpayers as measured by adjusted gross income (AGI) accounted for just over 88% of total adjusted gross income and paid 97% of all federal income tax. The threshold to make it into the top half of 2016 taxpayers was $40,078. Total AGI for all Americans in 2016 was $10.16 trillion and total federal tax payments were $1.4 trillion.
As is always the case with a graduated (some call it progressive) taxation system like that of the United States, the higher the income, the greater the share of taxes paid. The top 3% of taxpayers (AGI of at least $256,673) paid 51% of total 2016 federal income tax. The top 1% (AGI of $480,804 or more) paid 37.3% of the year’s total.
At the tippy-top of the income range, the top 0.01% of taxpayers (AGI of at least $10.96 million) reported 4.5% of total 2016 income and paid 8% of all federal income tax. The 0.001% (AGI of at least $53.05 million) reported 2% of total U.S. AGI and paid 3.2% of all federal tax.
Those income ranges are given as the low end of a distribution. The average AGI for taxpayers in the top 0.001% was $145.45 million, nearly triple the low end of the range but down slightly from an average of $152.02 million in 2015. And among the top 50%, where the threshold was just over $40,000, the average AGI was $127,472, a year over year increase of $25.
[nativounit]
The IRS also noted that total AGI earned through salaries and wages in 2016 for all taxpayers amounted to 70.5% of all income. For the top 0.001%, earned income comprised just 10.3% total AGI. Sales of assets accounted for 55.1% of AGI for these taxpayers compared to just 6.1% for all taxpayers.
In 2016, Americans filed 140.89 million tax returns. Of those, 1,409 were filed by the top 0.001%, 14,089 by the top 0.01%, 140,889 by the top 0.1% and 1.41 million by the top 1%. The top 50% of filed returns totaled 70.44 million.
The full report from the IRS is available at the agency’s website.
[recirclink id=539979]
[wallst_email_signup]
Contact [email protected] for any questions or corrections.
Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
