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Article Author:

One-Minute Thought — Selected Federal Income Tax Information for Consideration in the Upcoming Election Season

An article released by the Urban-Brookings Tax Policy Center contained some interesting information about the level of taxable income that it took for the average taxpayer to owe any federal income tax. Assumptions were made that the income was all ordinary income and that a family with children would qualify for the child tax credit. An assumption was also made that, depending on income level, a taxpayer would qualify for the earned income tax credit (a credit that was designed to help offset social security taxes for lower-wage-earning taxpayers).

Using these assumptions, here is what the Urban-Brookings Tax Policy Center found for 2010. A single person with no children began paying federal income taxes after they reached an average income of $13,401. A single person with two children began paying federal income taxes after they reached an average income of $39,936. 

For married couples with no children, they began paying income taxes at an average income level of $26,704. For married couples with two children, the average income level was $50,253.

Compare these data to the median 2010 household income of $49,445 computed by the U.S. Census Bureau (a decline of 2.3% from 2009).

Consequently, if this median household were married with two children, than this median household income of $49,445 would likely pay no federal income taxes. Of course, these are two different statistics and don’t match up identically.

However, the important message is that in looking over the landscape of the US, the median household income is under $50,000. That means more than half the US households make less than $50,000 per year. We are not advocating any position for or against income tax, flat tax, gross taxes, or any other tax changes. We did believe it may help to share some of these statistics that we see from time to time.

For discussion or comments on this article please contact Michael Calahan at mcalahan@BlackmanKallick.com or 312-980-2996 or your Blackman Kallick representative.

 

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.