Distribution of Federal Taxes

New policies implemented by the federal government affected transfers and taxes in 2021. The policies largely benefited lower- and middle-income households. But income inequality still increased, mainly because of realized capital gains.

CBO regularly analyzes the distribution of income in the United States and how it has changed over time. This slide deck presents the distributions of household income, means-tested transfers, and federal taxes between 1979 and 2021.

In 2020, the coronavirus pandemic and the ensuing federal response had significant effects on the distribution of household income. Income inequality before transfers and taxes increased, but inequality after transfers and taxes decreased.

CBO regularly analyzes the distribution of income in the United States and how it has changed over time. This slide deck presents the distributions of household income, means-tested transfers, and federal taxes between 1979 and 2020.

CBO regularly analyzes the distribution of income in the United States and how it has changed over time. This report presents the distributions of household income, means-tested transfers, and federal taxes between 1979 and 2019.

CBO examined how the benefits from major tax expenditures in the individual income tax and payroll tax systems were distributed among households in different income groups in 2019.

In 2018, average household income after accounting for means-tested transfers and federal taxes was $37,700 among households in the lowest quintile and $243,900 among households in the highest quintile.

In 2017, average household income before accounting for means-tested transfers and federal taxes was $21,300 for the lowest quintile and $309,400 for the highest quintile. After transfers and taxes, those averages were $35,900 and $229,700.

This report projects the distributions of household income, means-tested transfers, and federal taxes under current law in 2021 and compares them with the actual distributions in 2016.