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Summary
In 2023, the roughly 134 million households in the United States received a total of about $20 trillion in income. That income was more equally distributed after transfers and taxes than before transfers and taxes.
In 2023, average income before transfers and taxes rose for households at the bottom of the income distribution and fell for those at the top. Income increased by 5 percent among households in the lowest quintile (or fifth) of the distribution from 2022 to 2023. (All measures of income in this report have been adjusted to remove the effects of inflation.) By contrast, income decreased by 9 percent among households in the top 1 percent. That decrease was largely due to a reduction in realized capital gains. Average income from other sources, on net, remained relatively unchanged among households in the top 1 percent.
The extent to which transfers and taxes reduced inequality was similar in 2023 and 2022. Measured as a percentage of income before transfers and taxes, means-tested transfers decreased by 2 percentage points among households in the lowest quintile. The effect of that decrease was partially offset by a 1 percentage-point decrease in federal tax rates for households in that quintile.
Income inequality decreased in 2023, whether measured before or after transfers and taxes. That decrease was mainly due to changes in income before transfers and taxes at the top and bottom of the income distribution.
