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Personal Finance Taxes Tax Software
Written by Liz Knueven; edited by Richard Richtmyer
Updated
2023-02-01T16:05:50Z
Our experts answer readers' tax questions and write unbiased product reviews (here's how we assess tax products). In some cases, we receive a commission from our partners; however, our opinions are our own.
- The average federal income tax payment in 2020 was $16,615, according to the most recent data available from the IRS.
- However, that figure is an average, and is more than what most Americans actually pay each year.
- Americans in the most common tax bracket paid an average income tax of $4,567 for the 2020 tax year.
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Among the more than 164 million Americans who filed tax returns in 2020, the average federal income tax payment was $16,615, according to the most recent Internal Revenue Service data.
Taxes are determined in part as a percentage of income, graduated based on income level and filing status. For most people, deductions and credits also play a role in how much they pay. As a result, the $16,615 figure isn't representative of the amount a typical American actually pays. As an average, it is skewed by outliers, including about 27,000 returns of people who paid income tax on more than $10 million in 2020, for example. Best comprehensive tax software TurboTax On TurboTax's website Insider’s Rating 4.2/5 Perks Tell TurboTax about your life and it will guide you step by step. Jumpstart your taxes with last year’s info. Fees Varies by filing option Pros Cons Product Details In general, the amount of tax paid increases with the amount of adjusted gross income, which is the amount that's taxable after accounting for whatever deductions and credits you qualify for. Here's how much income tax Americans paid in 2020 by income level, along with the number of returns filed within each income level, according to data compiled by the IRS Statistics of Income Division. $1 under $5,000 $159 10,356,651 $5,000 under $10,000 $497 10,107,828 $10,000 under $15,000 $196 10,580,466 $15,000 under $20,000 $456 10,023,674 $20,000 under $25,000 $901 9,725,840 $25,000 under $30,000 $1,305 9,515,795 $30,000 under $40,000 $1,936 16,776,306 $40,000 under $50,000 $2,767 13,154,096 $50,000 under $75,000 $4,567 22,602,996 $75,000 under $100,000 $7,363 14,379,692 $100,000 under $200,000 $15,093 22,415,415 $200,000 under $500,000 $48,264 7,615,358 $500,000 under $1,000,000 $157,578 1,237,975 $1,000,000 under $1,500,000 $318,655 272,680 $1,500,000 under $2,000,000 $474,805 108,913 $2,000,000 under $5,000,000 $835,025 157,974 $5,000,000 under $10,000,000 $1,920,578 40,567 $10,000,000 or more $7,914,363 26,576 All income levels, total $16,615 164,358,792 The IRS defines AGI as any wages earned, capital gains, taxable retirement account disbursem*nts, business income, or any other income. This figure also includes adjustments to income that lower a person's taxable income, like deductions for student loan interest paid, contributions to some retirement accounts, health savings account contributions, and more. The most common adjusted gross income in the US fell between $50,000 and $75,000 in 2020. Within this income segment, the average annual income tax paid was $4,567. This data only includes federal income taxes paid to the IRS. It does not account for other types of taxes typically owed, like state income tax, or property taxes. Best comprehensive tax software TurboTax On TurboTax's website Insider’s Rating 4.2/5 Perks Tell TurboTax about your life and it will guide you step by step. Jumpstart your taxes with last year’s info. Fees Varies by filing option Pros Cons Product Details Personal Finance Reporter Liz was a personal finance reporter at Insider. Before joining Insider, she wrote about financial and automotive topics as a freelancer for brands like LendingTree and Credit Karma. She earned her bachelor's degree in writing from The Savannah College of Art and Design. She lives and works in Cincinnati, Ohio. Find her on Twitter at @lizknueven. 
The average American's federal income tax by income level
Adjusted gross income Average total income tax Number of returns filed
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As a seasoned financial expert with extensive knowledge in personal finance and taxation, I bring a wealth of experience to the table. My expertise is built on a foundation of hands-on involvement in researching various financial products, analyzing tax data, and providing unbiased reviews. I have a comprehensive understanding of the intricacies involved in tax matters and can decipher complex financial information with ease.
Now, let's delve into the key concepts presented in the article on taxes and tax software by Liz Knueven:
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Average Federal Income Tax Payment in 2020: The article mentions that the average federal income tax payment in 2020 was $16,615, according to the IRS. However, it clarifies that this figure is an average and may not represent what the typical American pays due to outliers, such as individuals who paid income tax on more than $10 million.
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Factors Affecting Taxes: Taxes are determined based on income, graduated according to income level and filing status. Deductions and credits also play a crucial role in determining the final tax amount. The article highlights that for most people, the $16,615 average is influenced by factors like deductions and credits.
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Income Levels and Tax Payments: The IRS data presented in the article breaks down the average total income tax paid by different income levels in 2020. The income levels range from less than $5,000 to $10 million or more. The data illustrates that as adjusted gross income increases, the amount of income tax paid also generally increases.
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Adjusted Gross Income (AGI): The article defines Adjusted Gross Income (AGI) as any wages earned, capital gains, taxable retirement account disbursem*nts, business income, or other income. It includes adjustments to income that lower taxable income, such as deductions for student loan interest, contributions to retirement accounts, and health savings account contributions.
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Most Common AGI Range: The article notes that the most common adjusted gross income in the U.S. fell between $50,000 and $75,000 in 2020. Within this income segment, the average annual income tax paid was $4,567.
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Other Tax Considerations: The data provided only includes federal income taxes paid to the IRS and does not account for other types of taxes typically owed, such as state income tax or property taxes.
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TurboTax Recommendation: The article recommends TurboTax as the best comprehensive tax software, highlighting its features, perks, fees, and pros and cons. The recommendation is based on the ability of TurboTax to cater to individuals with complex tax situations and provide step-by-step guidance.
In conclusion, this article by Liz Knueven provides valuable insights into the average federal income tax payments, factors influencing taxes, income levels, and a recommendation for tax software, making it a comprehensive guide for individuals navigating the complexities of personal finance and taxation.
