:max_bytes(150000):strip_icc()/HowMuchDoestheAverageAmericanPayinTaxes-4766e20500674c348d47f9f53d9fd159.jpg "How Much Does the Average American Pay in Taxes? (1)")
The U.S. progressive tax system makes it difficult to pin down an “average” taxpayer. There are seven tax brackets, ranging from 10% to 37%, so the average tax rate might be expected to be 24.57%. Conveniently, there is a 24% tax bracket. So is this what the average American pays in taxes? Not really. One measure reports a figure of 13.3% for all taxpayers. Another measure puts it at more than 28%. Here’s how it breaks down.
Key Takeaways
- One measure of average income tax burden reports a figure of 13.3% for all taxpayers, but coming up with an average is surprisingly difficult.
- For the tax year 2022, the federal income tax brackets range from 10% to 37%.
- The top 50% of taxpayers paid 97.1% of all federal income taxes in 2018. Among those taxpayers, the average income tax rate was 14.6% and the average tax paid was $20,663.
- The OECD reported that the U.S. "tax wedge" for the average single worker was 28.4% in 2021.
How Tax Brackets Impact Rates
The 24% bracket applies only to income from $89,075 through $170,150, at least for single taxpayers. These income thresholds vary by filing status. Here’s how the brackets for the single filing status break down for tax year 2022:
| Marginal Tax Rate | Income Threshold |
|---|---|
| 10% | $0 to $10,275 |
| 12% | $10,275 to $41,775 |
| 22% | $41,745 to $89,075 |
| 24% | $89,075 to $170,050 |
| 32% | $170,050 to $215,950 |
| 35% | $215,950 to $539,900 |
| 37% | $539,900 or more |
The 24% rate wouldn’t affect an unmarried taxpayer earning $35,000 a year. They would be in the 12% tax rate bracket—but only on income over $10,275. The first $10,275 would be taxed at just 10%.
Note
These income spans are up somewhat from what they were in the tax year 2021 because they’re tweaked annually to keep pace with inflation.In 2022, for example, the federal income tax brackets range from 10% to 37%, which for single filers will span from $0 to $10,275 at the lowest marginal rate to $539,900 or more at the top rate, respectively.
'Median' Might Be a Better Term
It might be easier to understand the median tax burden of American taxpayers instead. The median is the number that falls in the middle of a data set. Theoretically, half of all taxpayers would pay less than a median figure, and half would pay more.
The top 50% of taxpayers paid 97.1% of all federal income taxes in 2018, the last tax year for which comprehensive and vetted statistics are available, according to the Tax Foundation. As a result, the bottom 50% paid just 2.9%.
Note
Based on these and other figures, the Tax Foundation derives an average tax rate of 14.6% for the top 50% of taxpayers, 3.4% for the bottom 50%, and an average of 13.3% overall.
But this is just one way of looking at the equation. There’s also something known as the “tax wedge,” and the figures from the Tax Foundation reflect only income taxes. Social Security and Medicare also take a percentage of Americans’ earnings. Technically, these should be considered when weighing an average tax burden.
The Tax Wedge
The tax wedge is the ratio between what the average worker takes home after taxes and their employer's total labor costs (which includes taxes and benefits and other costs, in addition to wages).
The Organisation for Economic Co-Operation and Development (OECD) calculates tax wedges annually for the U.S. and dozens of other developed countries. The tax wedges are based on the pay and tax brackets of single individuals, and the idea is that the higher the tax wedge, the less likely it becomes that some taxpayers will see any benefit in holding down a job.
Calculating the Tax Wedge
Tax wedge calculations include income taxes and FICA taxes—Social Security, Medicare, and the Additional Medicare tax, where applicable. But the federal income tax represents the biggest burden on American taxpayers.
Employers’ and employees’ Social Security and Medicare shares are used to calculate the OECD tax wedge. Even if an employee doesn’t have to pay their employer’s share out of pocket, that money would have otherwise been paid to them without that contribution. The Social Security tax rate for wages paid in 2022 is set at 6.2% for both employers and employees, while the rate for self-employment income is 12.4%. The Medicare tax takes 1.45% for employers and employees and 2.9% for self-employed individuals.
The U.S. Tax Wedge
The OECD reported that the U.S. tax wedge for the average single worker increased by 1.2 percentage points from 27.2% in 2020 to 28.4% in 2021, which is less than the OECD average for all countries—34.6% in the same year. Meanwhile, after taxes and benefits, the take-home pay of an average single U.S. worker was 77.4% of their gross wage, compared with the OECD average of 75.4%.
According to the OECD, COVID-19 pandemic-based legislation is thought to have contributed to the tax wedge decrease.
So what does this mean in dollars? Assuming a median yearly salary of $53,924, a tax wedge of 28.4% works out to about $15,314.42, meaning the average worker contributed that much to the federal government.
The OECD tax wedge only includes these three taxes: income, Social Security, and Medicare. It doesn’t include sales, property, vehicle, or state income taxes.
Frequently Asked Questions (FAQs)
What is the average tax rate in the U.S.?
In 2021, the average tax rate was 22.6% in the U.S., according to the Organisation for Economic Co-operation and Development.
How much tax do you have to pay on $1,000,000?
Because the tax system is progressive, a single taxpayer with no children, who earned $1 million, would pay taxes in each tax bracket, paying 37% on the income that exceeded $539,900. Assuming no credits or deductions of any sort other than the standard deduction, this all adds up to a little more than $335,000 in federal income tax due, or an effective tax rate of 33.5%.
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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
IRS. "IRS Provides Tax Inflation Adjustments for Tax Year 2021."
IRS. "IRS Provides Tax Inflation Adjustments for Tax Year 2022."
The Tax Foundation. “Summary of the Latest Federal Income Tax Data, 2021 Update.”
Tax Foundation. "What Is a Tax Wedge?"
Organisation for Economic Co-operation and Development. "Tax Wedge."
Social Security Administration. "Contribution and Benefit Base."
Organisation for Economic Co-operation and Development. "Taxing Wages 2022 - The United States." Pages 1, 2.
Organisation for Economic Co-operation and Development. "Taxing Wages 2022: Impact of COVID-19 on the Tax Wedge in OECD Countries."
U.S. Bureau of Labor Statistics. "Usual Weekly Earnings of Wage and Salary Workers First Quarter 2022."
