Source: Congressional Budget Office.
"Middle Quintiles" are incomes falling between the 21st and 80th percentiles.
Gray bars in the chart denote economic recessions.
Income before transfers and taxes is market income plus social insurance benefits.
Market income consists of labor income; business income; capital income (including capital gains); income received in retirement for past services; and other nongovernmental income sources. Social insurance benefts consist of benefts provided through Social Security (Old Age, Survivors, and Disability Insurance); Medicare (measured as the average cost to the government of providing those benefts); unemployment insurance; and workers' compensation.
Means-tested transfers are cash payments and in-kind transfers from federal, state, and local governments. The largest means-tested transfers consist of transfers provided through Medicaid and the Children's Health Insurance Program (measured as the average cost to the government of providing those benefts); the Supplemental Nutrition Assistance Program (formerly known as the Food Stamp program); and Supplemental Security Income.
Federal taxes consist of individual income taxes, payroll taxes, corporate income taxes, and excise taxes.
Income after transfers and taxes is income before transfers and taxes plus means-tested transfers minus federal taxes.
Income groups are created by ranking households by income before transfers and taxes, adjusted for household size. Quintiles (fifths) contain equal numbers of people; percentiles (hundredths) contain equal numbers of people as well.
For more detailed definitions of income, see the appendix.