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The Distribution of Household Income and Federal Taxes, 2011

“In 2011, according to CBO’s estimates, average household market income—a comprehensive income measure that consists of labor income, business income, capital income (including capital gains), and retirement income—was approximately $81,000. Government transfers, which include benefits from programs such as Social Security, Medicare, and unemployment insurance, averaged approximately $13,000 per household. The sum of those two amounts, which equals before-tax income, was about $94,000, on average. Federal taxes as examined in this report comprise four separate sources: individual income taxes, payroll (or social insurance) taxes, corporate income taxes, and excise taxes. Taken together, those taxes were about $17,000 per household, on average, in 2011. Thus, average household income after taxes was about $77,000, and the average federal tax rate (federal taxes divided by before-tax income) was 17.6 percent. How Were Income and Federal Taxes Distributed in 2011? Before-tax income was unevenly distributed across households in 2011. Average before-tax income among households in the lowest one-fifth (or quintile) of the distribution of before-tax income was approximately $25,000 in 2011, CBO estimates (see table below). Among households in the middle income quintile, average before-tax income was about $66,000. Relative to those two income groups, households in the highest income quintile had average before-tax income that was much higher—approximately $246,000…”

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