![]() The second provided $600 for single filers, $1,200 for joint filers, and $600 for each qualifying child. The first round of payments provided $1,200 for single filers, $2,400 for joint filers, and $500 for each qualifying child. Two rounds of Recovery Rebates also reduced tax liability for qualifying taxpayers. As unemployment rose to record highs, lawmakers expanded unemployment benefits beginning in early 2020 and created a $10,200 income tax exclusion for the 2020 tax year, available to taxpayers with modified AGI below $150,000. Between 20, AGI dropped by 6.6 percent for the bottom half of taxpayers, while it increased by 7 percent for the top half of taxpayers. Typically, a recession lasts longer than six months, but recovery from a recession can take a few years.Ĭaused financial hardships for many lower- and middle-income households. The recession A recession is a significant and sustained decline in the economy. The pandemic-related downturn and relief programs both affect the 2020 data. ![]() Pandemic-Related Downturn and Relief Programs The result overstates the tax burden of the bottom half of taxpayers. Source: IRS, Statistics of Income, ”Individual Income Rates and Tax Shares.”īecause the Office of Management and Budget (OMB) classifies the refundable part of tax credits as spending, the IRS does not include it in tax share figures. Summary of Federal Income Tax Data, Tax Year 2020 Rate inched up slightly from 13.29 percent in 2019 to 13.63 percent in 2020. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. imposes a progressive income tax where rates increase with income. The average individual income tax An individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. Total income taxes paid rose by $129 billion to $1.7 trillion, an 8 percent increase above 2019. Taxpayers reported more than $12.5 trillion in AGI on 157.5 million tax returns in 2020, an increase of $650 million in AGI and 9.3 million in returns above 2019. Reported Income and Taxes Paid Increased in Tax Year 2020
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