Who Pays What Rates and Amounts in Federal Income Tax?

Tax rates are always of concern, especially if you happen to be in the top rate bracket.

Since the Federal income tax is a progressive approach to taxation, pushing tax rates up as one earns more income, the following table tells a great deal when examining who is paying the highest rates of tax and the most federal income tax.

The above chart from the Tax Foundation, based on IRS data, illustrates very clearly that the top 1% of taxpayers pay the highest average tax rate.  In this group, the rate moves to an average of 26.3%, even though the marginal rate (on the next dollar received), when one is in the top 1%, can be up to 37%.

Of course, if this income tax was the only tax being paid by the taxpayer, it would not be a major issue for most taxpayers, acknowledging that everyone would rather pay no tax. 

With the 26% average rate, and a marginal rate of 37%, these and all  taxpayers must also calculate their other tax burdens.  These include other federal taxes, such as FICA taxes, investment taxes, excise taxes, state income taxes, city taxes, property taxes, transfer taxes, and much more.

More recently, major cities in the US, such as NYC, LA, etc. have also looked at wealth taxes and other charges against taxpayers.

When all these taxes are looked at as a cumulative sum, the tax burden continues to be of concern.

2026 and 2027, depending in part on coming elections, will certainly visit the many taxes now existing and legislators will examine new forms of tax revenue, such as those related to the web, AI, and other tech areas.

By

Dr. Mark Lee Levine, Professor, University of Denver