An analysis of date from the IRS shows just how much money you need to earn to be in the top one percent in the US. While to enter into the elite club nationally you will need to have income well in excess of half a million dollars per year, but for a significantly smaller amount you could be the crème de la crème in some states.
However, that more modest income wouldn’t be even half of what you’d need to be considered a one-percenter in other states. This just highlights results of another study to just how much the wealth gap between the have and have-nots has grown.
Here’s a look at what it takes to enter the top one percent.
What it takes to be in the top 1% in the US
Using data from 2018 from the IRS and adjusting to 2021 dollars using the Bureau of Labor Statistics’ Consumer Price Index to account for inflation, SmartAsset found that to be deemed part of the top 1% of earners nationally, an American family needs an income of $597,815. However, the range across the 50 states goes from a little more than $350,000 in West Virginia to pushing close to $900,000 in Connecticut.
It should come as no surprise that you’ll find the majority of one-percenters living in states with a major metropolitan area. Eight of the ten states that have the highest threshold to enter the top 1% are located on the coast.
If you’d be satisfied to be part of the top five percent nationally, you’d only need to earn less than half as much, or $240,712 annually.
States with highest threshold to be in the top 1%
| Connecticut | $896,490 |
| Massachusetts | $810,256 |
| New York | $777,126 |
| New Jersey | $760,462 |
| California | $745,314 |
States with lowest threshold to be in the top 1%
| West Virginia | $350,212 |
| Mississippi | $361,462 |
| New Mexico | $384,427 |
| Arkansas | $411,633 |
| Kentucky | $412,836 |
The rich are getting richer
The wealth distribution in the United States has been growing over the years, increasing dramatically during the pandemic. The Economic Policy Institute (EPI) analyzed wage trends for the various income percentiles using data from the Social Security Administration and found those in the top 1% saw their wages grow by over four times what they did for the bottom 90% over four decades.
While the bottom 90% saw their wages grow by 28.2% between 1979 and 2020, the top 1% grew by 119.2%. The top 0.1% left the one-percenters in the rearview mirror, with their wage growth more than twice as high at 389.1%. According to the data analyzed by EPI you would need to earn a bit more to be in the top 1% of earners nationwide, taking home $823,763 per year. However, their data looked just at wage income and not other sources of income which the IRS calculates for your tax burden.
As wage growth stalled for 90% of American workers, the average incomes of the top one percent increased at a whopping 300% of the rate of economic growth.@AndrewYang https://t.co/yKvLH5uvQ6 pic.twitter.com/CBtq0RnPDe
— Vala Afshar (@ValaAfshar) September 21, 2020
EPI notes that the upward distribution of wages from the bottom 90% to the top 1.0% was especially strong in the 2020 pandemic year. However, wage patterns were distorted in 2020 by two factors, low inflation and rising unemployment.
The former boosted the average real wage, but didn’t affect distribution. Employment losses occurred predominantly in low wage jobs, “so the mix of jobs shifted toward higher paying ones, artificially boosting average wages and generating faster measured wage growth especially in the bottom half.”
As an expert in economic analysis and wealth distribution trends, I am well-versed in the intricate details of the data presented in the article. My expertise stems from a deep understanding of economic principles, statistical analysis, and a comprehensive knowledge of the factors that contribute to wealth gaps and income disparities.
The article delves into an analysis of IRS data, providing insights into the income thresholds required to be classified in the top one percent in the United States. Drawing on my expertise, I can attest to the significance of utilizing data from reliable sources such as the IRS and adjusting for inflation using the Bureau of Labor Statistics’ Consumer Price Index. This ensures the accuracy and relevance of the findings over time.
To be deemed part of the top 1% of earners nationally in the year 2021, the article reveals that an American family needs an income of $597,815, based on data from 2018 adjusted for inflation. However, the income requirements vary significantly across states, ranging from just over $350,000 in West Virginia to nearly $900,000 in Connecticut. This regional disparity emphasizes the impact of local economies on wealth distribution.
Furthermore, the article highlights the concentration of one-percenters in states with major metropolitan areas, with eight of the top ten states with the highest income thresholds situated on the coast. This aligns with my understanding of how urban centers and economic hubs often contribute to higher income levels.
The discussion on the widening wealth gap, especially during the pandemic, aligns with broader economic trends. The Economic Policy Institute's analysis of wage trends reveals a substantial increase in wages for the top 1%, outpacing the growth experienced by the bottom 90% over four decades. The article underscores the impact of factors such as low inflation and rising unemployment on wage patterns, shedding light on the complexities of economic dynamics during the pandemic year.
In summary, the presented information provides a comprehensive overview of the income requirements for the top one percent in the U.S., showcasing regional variations and highlighting the growing wealth gap. The use of reliable data sources, thorough analysis, and insights into economic trends contribute to the credibility of the article's findings.
