Americans who earn more than $99,857 a year paid more than 87% of all federal income taxes in 2022, while those who make less than $50,330 paid about 3% of the share of federal income taxes, according to a National Taxpayers Union Foundation (NTUF) report released Wednesday.
The new data also revealed that the top 1% of earners, defined as those with incomes over $663,164, paid nearly 40.43% of all income taxes. The top 10% of earners accounted for 72.0% of all income taxes.
“The reality is that the tax code is very progressive—meaning that, as people earn more income, they pay more in taxes, while those working their way up the lower rungs of the income ladder are largely spared from income taxes,” said Demian Brady, NTUF Vice President of Research and author of the report, which NTUF has released annually for decades, supplemented with historical IRS data since 1980. “Over the decades, tax reforms have reduced top marginal income tax rates, yet the share of the income tax burden borne by higher earners has generally increased, well out of proportion to their income share.”
Taxes will dominate Congress’s agenda in 2025 as lawmakers confront the impending expiration of key provisions of the 2017 Tax Cuts and Jobs Act (TCJA). These expirations will spark intense debate over the future of the tax code, and will undoubtedly feature arguments from some that the wealthy do not pay their “fair share” of taxes.
That argument contrasts sharply with the reality presented in new data from the IRS showing the share of taxes paid by taxpayers across income ranges from Tax Year 2022 for tax forms filed in 2023.
Many in the bottom 50% of earners, defined as those with incomes below $50,339, owed no income tax at all because their earnings were below the taxable threshold or they were eligible for tax credits that offset their liability.
“Policymakers must approach the TCJA debate with a clear understanding of the progressivity of the income tax system and its implications. Extending tax cuts that encourage economic growth and allowing Americans to retain more of their income should remain a priority. A tax code that fosters opportunity, rewards productivity, and minimizes undue burdens will not only promote fairness but will also strengthen the nation’s economic future,” Brady said.