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.
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.