In 2018, the top 1% of taxpayers – defined as those with adjusted gross income above $540,009 – earned 20.9% of all adjusted gross income (AGI) and paid 40.1% of all federal income taxes, according to data from the Tax Foundation. The group paid more in income taxes (at about $615 billion) than the bottom 90% of taxpayers combined ($440 billion).
The share of taxes shouldered by the nation’s richest individuals has climbed over time. In 2001, for example, the top 1% accounted for 33.2% of the nation’s individual income taxes.
From 2001 to 2018, the share paid by the bottom 50% of taxpayers fell to 3% from 4.9%.
However, over that time period, the amount of AGI reported by the wealthiest Americans also rose to 20.9% from 17.4%, likely accounting for a rise in tax obligations. Reported income among the bottom 50% of taxpayers fell.
The top 1% of taxpayers unsurprisingly also paid the highest average tax rate of 25.4% in 2018, which was more than seven times the rate faced by the bottom 50 percent of taxpayers.
The Tax Cuts and Jobs Act also went into effect for taxpayers in 2018 – and the Tax Foundation noted that this lowered the average tax rates paid across groups.
The average tax rate faced by all taxpayers decreased to 13.3% from 14.7% in 2018 from the year prior.
The top 1% of taxpayers saw their average rates fall to 25.4% from 26.8%.