15 Pesky Income Tax Statistics to Prattle About in 2023
Updated · May 20, 2023
Let’s face it, no one likes paying taxes.
But while some will prattle on about how they enable the building of a more socially conscious country à la Northern Europe, most will simply agree they’re a necessary evil… and for many, even an unnecessary one.
Here, though, we’ll look at all sorts of tax-related numbers and statistics, and let you make your own conclusions about what’s good and what’s not. How many taxpayers are there in the US?
How much do they pay every year?
All that and more, below.
Nettlesome Taxes Facts (Editor’s Choice):
- The top 20% pay ~70% of federal taxes.
- 57.1% of Americans didn’t pay income tax in 2021.
- The Revenue Act of 1861 first introduced taxes to finance war.
- The Federal Tax Code is 70,000 pages long.
- 89% of Americans oppose cheating on taxes.
- Americans spend $140+ billion every year just preparing taxes.
- The government collected $4.05 trillion in taxes in 2021.
The US Tax Paying Population in Numbers
We’ll get you started with the most important bits right away—after all, that’s probably what you came here for. How many taxpayers are there in the US in 2022 and who pays the most? Coming right up.
1. There are 148 million taxpayers in the US.
(Source: Tax Foundation)
With that many people paying taxes, it’s no surprise the US makes several trillion in tax revenue yearly. That said, the number of US taxpayers sits at about 45% of the total population of the country.
On the other hand, you might want to know it has been rising. In 2017, 143 million people paid taxes. In just two years, this number increased by five million.
2. The Top 1% pay ~24% of total taxes.
(Source: New York Magazine)
This one is a matter of contention, with politicians arguing about it all the time. Some say we need to “tax the rich,” others claim the rich already pay the most taxes. Considering we’re discussing exact numbers here, you might be wondering what causes such discord. Well, it’s the type of taxes.
The rich are only a small portion of the US taxpayer population, but they do pay a huge amount of income tax. However, like any diligent taxpayer knows, there’s a lot more to it than that. When you account for all taxes, it turns out the top 1% pay about 24% of the total.
While it’s true that this is still a lot of money, it’s also clear the wealthiest Americans aren’t the most altruistic. That courtesy goes to the 80th to 95th percentile, who pay 26% of the total.
3. More than half of the US population didn’t pay income tax in 2021.
If you are a diligent taxpayer, you surely have wondered what percentage of Americans don’t pay taxes. And we have to say, you might not like the answer.
Latest data indicates that 57.1% of Americans didn’t pay income tax in 2021. That said, it’s actually fairer than it sounds. This number varies drastically by income bracket, such that no household making under $20,000 paid any income tax whatsoever, whereas 99.6% of households with a reported income of over $500,000 did pay up (don’t ask about the remaining 0.4%, we want to know, too).
Additionally, this percentage has dropped since its spike in 2020, when 61% paid nothing—for obvious (pandemic-related) reasons.
4. The Top 50% pay 96.9% of income taxes.
(Source: Tax Foundation)
Who pays taxes in the US? Mostly the wealthier half of society. The bottom half are responsible for just 3.1% of federal tax revenue (that’s still ~$50 billion, though).
That said, their share of the total adjusted gross income is 11.5%, so it’s hard to expect much in the way of tax paying. The upper 50% make ten times more money on average.
Another eye-opening way of looking at this stat is through average tax rates. For the top 50%, it’s 14.6%, and for the bottom—3.5%.
5. Americans spend 7.6 billion hours preparing taxes.
(Source: U.S. News)
It might sound a bit extreme, but it’s the White House advisory board's official estimate on the matter, so it’s probably fairly accurate. Plus, considering how many taxpayers there are in the US, it makes perfect sense. If we take the latest stats pointing at ~148 million taxpayers, this means each one of them spends more than 50 hours every year preparing taxes.
It gets worse, though—doing taxes doesn’t just take up a lot of time, it also costs a lot of money. Estimates vary from $140 to $168 billion annually, but even at the low end, this adds up to ~$950. It’s a shocking amount, but keep in mind many Americans turn to professional tax preparers and those can easily charge hundreds of dollars, especially if your circumstances are unusual.
Fun fact: 40% of Americans say doing taxes is hard.
6. 33% of millennials fail to report side hustles in tax filings.
We told you what percentage of Americans pay taxes, but now we’d like to bring your attention to some intriguing data about a more specific case.
Millennials are the most entrepreneurial generation at the moment and as such tend to engage in various side hustles, which often bring in an annual income of thousands of dollars. Yet, a third of them fail to report that. For comparison, 26% of Gen Xers and 17% of baby boomers evade taxes on side gigs.
The US Annual Tax Revenue, or How Much the Government Makes
Taxes are basically a yearly subscription that we pay to the government for living in the country. Like most subscriptions, this one, too, tends to get more expensive over time. If you are curious how much money the government collects from the nearly 150 million taxpayers in the US, read on. Spoiler warning: it’s a lot!
7. The US government collected $4.05 trillion in taxes in 2021.
(Source: Data Lab)
Let’s cut to the chase—how much tax revenue does the government collect every year? Trillions. In 2021, it was $4.05 trillion. From 2014 to 2020, in the range of $3 trillion, though continuously increasing.
The majority of this money comes directly from the common taxpayer—more than half from individual income taxes and another third from payroll taxes. Corporations pay a tiny amount in comparison, at well under 10%.
Fun fact: 1990 was the first year in which federal tax revenue broke the trillion mark for a total of $1.03. In 1989, the government had collected $991 billion.
8. Income taxes contributed ~$2 trillion in federal revenue for 2021.
(Source: The Balance)
The main source of federal revenue in the United States are individual income taxes. In 2021, they made up about half of the total collected. Payroll taxes, which are paid on wages to finance social programs such as Medicare and unemployment insurance, were a close second at 36% (~$1.4 trillion).
Corporate income taxes contributed $284 billion. It’s worth noting that recent tax cuts have overwhelmingly benefited corporations. Just a few years ago, they used to pay ~11% of the total, but are now only responsible for ~7%, putting a bigger weight on the shoulders of individuals.
9. Corporate tax in the US was among the highest in the developed world at 38.9%.
“Was” being the keyword here… though, there’s more to this stat than meets the eye. Corporate tax used to be high at first—53% following WW2, but fell to ~38% in the 90s and stayed that way until 2018.
That said, income tax statistics show that corporations were taxed at a maximum of 35%, and due to various deductions, generally only ended up paying ~18% in tax. This last number is much more in line with other OECD countries.
However, since the Trump administration reduced the maximum tax rate from 35% to a flat 21% (before deductions) in 2017, the US is no longer the most expensive country to do business anyway.
10. Two to three times fewer people pay taxes today than in the 80s.
(Source: Tax Foundation)
You already know what percentage of Americans pay income tax, now we’ll tell why some don’t. It has to do with income taxes in the US being progressive.
Successive governments have made efforts to reduce the burden on low- and medium-income families, particularly through the inception of several programs, such as the Child Tax Credit (CTC) bill. In 1998, when it first started, the CTC provided $500 in nonrefundable credit per child; this was later expanded to $1,000 in 2001 and then to $2,000 in 2017.
As of 2021, the CTC provides $3,600 in fully refundable credit. The Earned Income Tax Credit (EITC) has been similarly expanded over the years to benefit a larger percentage of the population.
11. The IRS loses about $381 billion annually due to tax evasion.
There are many ways to evade taxes, one of the most popular being not reporting side jobs. Up to one-third of the population are guilty of it, and with how many taxpayers there are in the US, it’s no big surprise this reportedly costs the IRS ~$381 billion every year. Among the worst offenders are nannies, who are often paid in cash, making exact figures hard to track.
If you do get caught, there can be rather intimidating consequences like losing your passport or having your property forfeited, though this tends to be exceedingly rare and only happens when the tax dodger is being uncooperative.
Facts about taxes can be fun, but something less fun is the IRS Whistleblower program, which serves to incentivize exposing tax evasion by awarding informants up to 30% of the amount collected.
Alternatively, you could make use of it if you want to be an upstanding member of society and bring tax evaders to justice… and get paid a decent sum in the process. Don’t hold us responsible if you piss someone off and get stabbed, though.
History of the US Tax System
We know of a scarce few people who enjoyed history classes in high school… and we bet you didn’t expect this to turn into a history lesson.
But we shan’t bore you too much here. Instead, we’ll provide you with a couple more fun facts about how US taxes became the monstrosity they’re now.
12. The deadline for paying taxes wasn’t always April 15.
What is tax season? It’s the period of time at the beginning of the year when we have to file our tax returns. It has changed several times throughout history, though.
When taxes in their current form first became a staple of American life in 1913, the deadline for filing a tax return was March 1. Fast forward a few years, in 1918, a new Revenue Act changed that to March 15. In 1955, the deadline was moved further back another month to the April 15 that we all dread.
The IRS claimed this allowed for ample time to deal with the workload, but experts say there’s another reason. Over time, more of the middle class had to pay taxes, and the IRS had to issue more refunds. By moving the deadline, the government could hold on to the money for longer.
13. The Revenue Act of 1861 first introduced taxes.
(Source: National Constitution Center)
Here’s some more income tax trivia you might find fascinating. Remember who came into power in 1861? That’s right, you have none other than Abraham Lincoln himself to blame.
To his credit, his idea of taxes wasn’t too bad: he imposed a mere 3% income tax that only applied to the wealthiest 3% of the population. Those with an income of less than $800 (~$18,000 now) were exempt. Most importantly, he implemented taxes to finance the Civil War and the reconstruction that followed.
While Lincoln’s Revenue Act only lasted ten years or so, until it had served its purpose, it did return a semicentury later with the ratification of the 16th Amendment in 1913. This new version was much more similar to the current tax system in America.
14. The Federal Tax Code is 70,000 pages long.
This one’s a shocker for sure, but to be completely transparent, it’s only that long with all the IRS regulations and revenue rulings as well as the annotated case law included. As of 2016, the actual internal revenue code itself is 4,132 pages.
On the other hand, one could easily argue that you have to know all of the details to make sure you’re not missing something important. I mean, that’s how big companies find all those juicy loopholes, right?
Is it a coincidence that the US is the country with the largest number of accountants in the world?
One thing is certain—it’s no wonder they don’t teach any semblance of tax calculation in high school.
15. 87% of Americans disagree with cheating on taxes.
Americans have historically been quite upright about paying taxes, with 87% saying it’s not right to cheat in 1999, and the exact same percentage giving the same answer in 2021.
The lowest recorded number was in 2003 when 81% opposed cheating and 19% thought it was okay to do it to an extent; 5% said they supported cheating as much as possible. We aren’t saying that’s the right attitude, but we respect their bravery, considering it’s the IRS itself who conducted the survey.
According to some more fun facts about taxes, 53% say they would not report a fellow American even if they knew he was cheating.
Furthermore, a third of respondents said they didn’t trust the IRS. Surprisingly, the ones who are least trustful of the institution are highly educated young people.
Taxes have somehow simultaneously gotten worse and better over time. On the one hand, they didn’t even exist until a century or so ago; on the other, various tax credit programs have made them much more manageable for lower-income households.
Whatever your stance on the notion of taxes themselves or the obscenely complicated tax code, you can now brag about knowing how many taxpayers there are in the US. We aren’t saying this will help you pay your taxes, but at least you won’t feel alone in your struggle.
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