As lawmakers and lobbyists do battle over tax reform in Washington, know where you stand now, so you can understand how changes will affect your pocketbook.
President Donald Trump is demanding “historic” tax reform. His Secretary of the Treasury promises "the biggest tax cut and the largest tax reform in the history of this country." And, as Congress gets serious about rewriting the nation’s tax law, we can’t help but recall the words of Oklahoma’s favorite son, humorist Will Rogers: “The only difference between death and taxes is that death doesn’t get worse every time Congress meets.”
But, seriously, it looks like big changes are coming. President Trump wants to cut tax rates for both individuals and businesses. There’s talk of wiping out many of our beloved itemized deductions, and raising the standard deduction so that millions of more taxpayers won’t care, since they’ll no longer itemize. One thing that is certain about major tax reform is that there will be winners and there will be losers.
It’s too early to know which camp you’ll fall in. But it’s not too early to know where you stand now. No matter how “rich” or “poor” or “middle class” you are, are you bearing your “fair share” of the nation’s tax burden today? Do you have the faintest idea what portion you pay now . . . beyond a gnawing feeling that it’s too darn much?
To help answer such questions, we created a tool to show how the nation’s taxable income and the country’s federal income tax bill are distributed among its citizens. Our tool uses the latest IRS data to shine a bright light into what are too often murky shadows.
We’ll also show you how your own income stacks up with that of your fellow Americans.
Are you ready to see where you fit in? With our simple calculator, enter a single number from your latest tax return, and you’ll instantly know the answer.
During the presidential campaign last year, here’s what we learned when we plugged in Hillary Clinton’s number into the calculator. Her $10,594,529 adjusted gross income (AGI) puts her in the top 1% of earners. Altogether, the top-earning 1% of taxpayers reported 20.6% of all AGI and paid 39.5% of total income taxes.
Since President Trump hasn’t released his tax returns, we couldn’t check up on him.
But our calculator will let you see where you fit in.
A look at the big picture
The latest numbers from the IRS— based on data from 2014 tax returns—show what it takes to be among the top 1% of income earners: At least $465,626 of adjusted gross income. That’s about $37,000 more than it took to buy into this rarified status a year earlier. The 1.4 million Americans with this elite status reported 20.6% of the total adjusted gross income reported on 2014 returns.
That’s right. One percent of taxpayers reported one-fifth of all income. And that same tiny group kicked in almost 40% of all the federal income taxes paid.
How much do you need to make to be in the top 50% of earners? Just $38,173.
Fall below that level, and you are in the bottom half, along with about 69 million of your fellow taxpayers. All told, that group earned just 11.3% of the AGI reported on 2014 federal returns. And they paid 2.7% of all the income taxes paid.
Use our calculator to see if you’re in the top 1%, 5%, 10%, 25%, 50% . . . or bottom 50% of income earners.
Our income and tax-burden breakdowns come from information reported on 2014 individual income tax returns. Income categories are based on adjusted gross income, which is basically income from taxable sources minus certain deductions—including deductible contributions to IRA, alimony paid and student loan interest—but before subtracting the value of exemptions and either the standard or itemized deductions.
Income Category 2014 AGI Percent of All Income Percent of Income Taxes Paid Top 1% Over $465,626 20.6% 39.5% Top 5% Over $188,996 36.0% 60.0% Top 10% Over $133,445 47.2% 70.9% Top 25% Over $77,714 68.9% 86.8% Top 50% Over $38,173 88.7% 97.3% Bottom 50% Below $38,173 11.3% 2.7%
(Note that these figures include only federal income taxes. According to one study, more than half of all wage earners pay more in Social Security and Medicare taxes than they do income tax. The percentage of those paying more of these payroll taxes than income tax soars to nearly 90% if you count both the employer and employee share of those levies.)