NTU Foundation's popular Who Pays Income Taxes page shows the distribution of the income tax burden by income percentile. The historical data, available from 1980 on, illustrates how the Tax Code has grown increasingly progressive, with a small share of earners paying the bulk of the income tax burden. The wealthiest one percent of earners shoulder 40 percent of all income taxes, an amount that is nearly double their Adjusted Gross Income Share. There are also a significant number of tax returns that show no income tax liability. The latest data available show that 35 percent of returns in 2014 paid no income tax.
Income tax rates are designed to shield low-income workers from excessive burdens. Thus, the number of nontaxable returns is in part indicative of the state of the economy. As the economy has slowly recovered and unemployment decreased, the number of taxable returns has gradually increased.
The number of nontaxable returns is also reflective of the number of exclusions and credits available to eligible filers. The Fiscal Year 2017 Budget reports that there are 196 "tax expenditures" related to individual and business tax income, up from the 128 tax expenditures listed in the FY 1980 historical budget book. While these tax credits provide targeted relief to eligible taxpayers (in lieu of a flatter tax with lower overall rates), they also contribute to the complexity and compliance burdens of the Tax Code.
|All Returns||Total Returns||Taxable Returns||Nontaxable Returns||Percentage of Nontaxable Returns|
|2014||All Returns||Joint Return||Filing Separately||Head of Household||Individual Returns||Surviving Spouses|
|Percentage of Non-Paying Returns||35.0%||23.9%||18.5%||67.9%||33.9%||49.6%|
Want to learn more? Check out our Tax Basics page for more statistical insight.