Life of Tax: How Much Tax is Paid Over a Lifetime | Self. (2023)


Life of Tax: How Much Tax is Paid Over a Lifetime | Self. (2)

Life of Tax: How Much Tax is Paid Over a Lifetime | Self. (3) Money Life of Tax: How Much Tax is Paid Over a Lifetime | Self. (4) A Life of Tax

The U.S. government collected over $4.9 trillion in taxes in 2022, [1] U.S. Treasury Fiscal Data, ‘How much revenue has the U.S. government collected this year?’ but how much will the average American pay in taxes throughout their lifetime?

Using expenditure and income data from sources such as the U.S. Bureau of Labor Statistics, as well as average home prices and automotive costs, we’ve analyzed just how much tax the average person is estimated to pay in each state.

Key statistics

  • The average American will pay $532,910 in taxes throughout their lifetime.
  • That’s a third (33.23%) of all estimated lifetime earnings ($1,571,244) spent on taxes.
  • Residents of New Jersey will pay the most in lifetime taxes ($1,168,919) and people in Wyoming will pay the least ($338,079).
  • Tax on earnings is where most tax will come from, with the average American paying $287,901 in a lifetime.
  • Owning the average passenger car will cost an additional $25,714 in tax payments alone, across the average 9.4 cars owned in a lifetime.
  • Tax on property will set the average homeowner back an additional $144,553 on top of the purchase price and running costs.
  • Taxpayers in Washington will pay the most on everyday expenses ($113,718), followed by those in California ($113,205), accounting for food, clothing, personal care, and entertainment.

Which states will pay the most in taxes over their lifetime?

Total Earnings Personal spending Property Cars

Which states pay the most in taxes compared to their lifetime earnings?

Taxpayers in New Jersey are estimated to pay a total of $1,168,919 in taxes over their lifetime, which amounts to 59.66% of their lifetime earnings, the highest of any state. This represents an increase of 12.86% in lifetime taxes from $1,035,725 when this study was last conducted in 2022. Factors contributing to this increase will include rising property prices and inflation, which led to higher personal expenditures and an increased cost of living.

Conversely, residents of Wyoming pay the lowest total taxes in the U.S., amounting to $338,079, or approximately 24.24% of their lifetime earnings. However, it is those living and working in Alaska who will pay the lowest percentage of tax proportional to their lifetime earnings, at just $360,839, the equivalent of 21.95%.

In the table below you can see a state-by-state breakdown of the average lifetime earnings compared to estimated lifetime taxes, and the percentage of earnings that will go toward tax payments.

State Lifetime Earnings Lifetime Taxes % of Earnings on Tax
New Jersey $1,959,223 $1,168,919 59.66%
Connecticut $1,782,575 $952,233 53.42%
Massachusetts $1,985,152 $938,874 47.29%
Washington $1,838,977 $778,416 42.33%
Maryland $1,979,864 $816,123 41.22%
California $1,640,787 $671,582 40.93%
Vermont $1,576,473 $644,087 40.86%
District of Columbia $2,837,996 $1,150,126 40.53%
Rhode Island $1,640,787 $659,076 40.17%
Illinois $1,625,629 $648,791 39.91%
Colorado $1,755,431 $697,471 39.73%
New Hampshire $1,789,077 $680,928 38.06%
Maine $1,555,949 $582,125 37.41%
New York $1,702,320 $635,031 37.30%
Nebraska $1,523,557 $567,902 37.27%
Kansas $1,491,165 $522,664 35.05%
Minnesota $1,717,634 $589,970 34.35%
Oregon $1,569,188 $532,208 33.92%
Iowa $1,530,215 $517,134 33.79%
Idaho $1,368,569 $462,278 33.78%
Utah $1,461,946 $486,583 33.28%
Michigan $1,459,321 $474,720 32.53%
Pennsylvania $1,605,222 $515,705 32.13%
New Mexico $1,336,921 $423,435 31.67%
Missouri $1,452,467 $457,257 31.48%
Ohio $1,496,766 $470,515 31.44%
Wisconsin $1,593,276 $499,736 31.37%
Montana $1,381,534 $426,505 30.87%
Oklahoma $1,349,729 $413,757 30.65%
North Carolina $1,457,755 $444,260 30.48%
Texas $1,490,695 $447,909 30.05%
Virginia $1,721,943 $512,967 29.79%
Georgia $1,469,270 $437,086 29.75%
Arkansas $1,326,581 $393,327 29.65%
Hawaii $1,590,025 $467,318 29.39%
Arizona $1,528,453 $442,965 28.98%
South Carolina $1,409,539 $400,584 28.42%
Kentucky $1,368,060 $382,865 27.99%
Mississippi $1,262,855 $351,802 27.86%
North Dakota $1,544,708 $426,172 27.59%
Indiana $1,488,306 $409,730 27.53%
Nevada $1,451,253 $399,516 27.53%
Louisiana $1,366,807 $374,147 27.37%
Alabama $1,367,942 $362,333 26.49%
Tennessee $1,436,016 $380,090 26.47%
West Virginia $1,321,489 $345,052 26.11%
Florida $1,409,930 $364,657 25.86%
South Dakota $1,455,052 $373,056 25.64%
Wyoming $1,394,890 $338,079 24.24%
Delaware $1,620,537 $379,518 23.42%
Alaska $1,643,568 $360,839 21.95%

These figures were calculated by adding both federal and state lifetime taxes across earnings, sales, property, and automotive, then compared against an estimated lifetime earnings figure based on the results of the latest American Community Survey (with inflation applied to 2023) and multiplied by the average years worked in the U.S. (36 years). [2] Journal of Forensic Economics, ‘Total Worklife Expectancy’ The full breakdown of what went into this study can be read in the methodology below.

How much tax will the average American pay in their lifetime?

The average taxpayer in the U.S. will spend 33.23% ($532,910) of their lifetime earnings ($1,571,244) on various state and federal taxes. However, due to local property markets, salaries, and government actions, some states see taxpayers paying even more than the national average.

You can see the average American’s lifetime tax breakdown in the following chart:

Life of Tax: How Much Tax is Paid Over a Lifetime | Self. (5)


This study takes individual median earning information from the American Community Survey (2021) per state [3] United States Census Bureau, ‘American Community Surve’$0400000 and applies inflation to bring estimates up to 2023 based on salary growth estimates of 4.2% in 2022 and 4.6% in 2023. [4] WTW, ‘U.S. pay increases to hit 4.6% in 2023, WTW survey finds’

The tax paid on earnings is based on state-level tax [5] Tax Foundation, ‘State Individual Income Tax Rates and Brackets for 2023’ and federal income taxes when applied to the average salaries in each state. Alaska does not implement a state income tax. A working lifetime of 36 years was used to analyze income taxes based on data from the study ‘Total Worklife Expectancy’ in the Journal of Forensic Economics. [2] Journal of Forensic Economics, ‘Total Worklife Expectancy’

Personal expenditure data comes from the Consumer Expenditure Report (2021) [7] U.S. Bureau of Labor Statistics, ‘Consumer Expenditure Survey’ from the Bureau of Labor Statistics, specifically census regional spending on food, apparel, personal care, and entertainment per year. Expenditure is divided by 1.3, the average number of earners in a household in 2021 [8] U.S. Bureau of Labor Statistics, ‘Table 1203. Income before taxes: Shares of annual aggregate expenditures and sources of income, Consumer Expenditure Surveys, 2021’ to reflect an expenditure for one individual. The CPI Inflation Calculator was used to make expenditure applicable to January 2023. State-specific taxes were applied to expenditure.

Property tax was calculated by using the cost of a single-family home in each state taken on the 31st January 2023, from Zillow. [9] Zillow, ‘Zillow Home Value Index (ZHVI): ZHVI Single-Family Homes Time Series ($)’ An individual was assumed to own property from 36 (the age of the average first-time homebuyer) [10] National Association of Realtors®, ‘NAR Finds Share of First-Time Home Buyers Smaller, Older Than Ever Before’ to 79.7 (the average life expectancy). [11] United Nations, Life Expectancy Some states have exemptions or rules of no property tax for those aged 65+, [12] Property Club, ‘States With No Property Taxes’ this has been applied in the calculation in those states.

The study takes the age an individual can acquire a full license in each state up to the recommended driving age as dictated by the CDC. [13] Centers for Disease Control and Prevention, ‘Older Adult Drivers’ The study uses the average value ($26,220) of a Toyota Camry LE four-door sedan, the highest-selling passenger car of 2022. [14] MotorBiscuit, ‘The Toyota Camry Is 2022’s Best-Selling Car’ Car owners were assumed to own an average of 9.4 cars over a lifetime. [15] CNBC, ‘Americans Buying Fewer New Cars in Lifetime’

Car property tax was taken from a WalletHub study [16] WalletHub, ‘2023’s Property Taxes by State’ analyzing this average cost in each state based on respective Department of Motor Vehicles data using weighted averages based on population size in cities and counties that account for at least 50% of a state’s population.

Inheritance tax was excluded from this study as it was deemed the average American would not have to pay this due to inheritance thresholds not being exceeded. Only six states have an inheritance tax and according to 2021 data from the IRS just 0.2% of U.S. adults who die have owed estate tax in recent years. [17] Internal Revenue Service, ‘Taxable Estate Tax Returns as a Percentage of Adult Deaths, Selected Years of Death’

Marriage and its effect on taxes were also not applied to this study as it did not impact taxes in the vast majority of cases representing the average American taxpayer.

This study was initially run in February 2021, then March 2022, and updated again in March 2023.



Life of Tax: How Much Tax is Paid Over a Lifetime | Self.? ›

The highest-earning Americans pay the most in combined federal, state and local taxes, the Tax Foundation noted. As a group, the top quintile — those earning $130,001 or more annually — paid $3.23 trillion in taxes, compared with $142 billion for the bottom quintile, or those earning less than $25,000.

Who pays the majority of taxes in USA? ›

The highest-earning Americans pay the most in combined federal, state and local taxes, the Tax Foundation noted. As a group, the top quintile — those earning $130,001 or more annually — paid $3.23 trillion in taxes, compared with $142 billion for the bottom quintile, or those earning less than $25,000.

What percent of US citizens pay taxes? ›

In total, about 59.9 percent of U.S. households paid income tax in 2022. The remaining 40.1 percent of households paid no individual income tax. In that same year, about 47.1 percent of U.S. households with an income between 40,000 and 50,000 U.S. dollars paid no individual income taxes.

How much money does the government make from taxes? ›

Individual income taxes accounted for more than half of total revenues for the federal government in 2022. The US collected $5.03 trillion in federal revenues in 2022, up $630 billion from the previous year, after adjusting for inflation.

How much does the average person owe the IRS? ›

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.

Does the middle class pay the most taxes? ›

Middle-Class Income Doesn't Matter as Much as Tax Brackets

The lowest tax bracket is 10%. The highest tax bracket is 37%. If you're in the middle class, you're probably in the 22%, 24% or possibly 32% tax brackets. That may sound as if you're paying 22%, 24% or 32% of your income toward taxes, but you're actually not.

Which race pays the most taxes? ›

For example, white Americans are 83 percent of total taxpayers, and the percentage of zero-tax filers who are white is 79 percent. African Americans are roughly 13 percent of total taxpayers and 17 percent of zero-tax filers. Asian Americans comprise 3.6 percent of total taxpayers and 3.4 percent of zero-tax filers.

How many US citizens do not pay taxes? ›

1. Forty-seven percent of Americans don't pay taxes. The most pernicious misconception about people who don't pay federal income taxes is that they don't pay any taxes. That oft-heard claim ignores all the other taxes Americans encounter in their daily lives.

What is the most common tax in the US? ›

Income tax is one of the most common forms of taxation that every American taxpayer must pay and is one of the most important streams of revenue for the federal government.

What are the 3 biggest expenses in the federal budget? ›

CBO: U.S. Federal spending and revenue components for fiscal year 2022. Major expenditure categories are healthcare, Social Security, and defense; income and payroll taxes are the primary revenue sources.

What does the US spend the most money on? ›

Spending Categories
  • 19 % Social Security.
  • 15 % Health.
  • 14 % Income Security.
  • 12 % National Defense.
  • 12 % Medicare.
  • 11 % Education, Training, Employment, and Social Services.
  • 8 % Net Interest.
  • 4 % Veterans Benefits and Services.

How much is the United States worth? ›

The financial position of the United States includes assets of at least $269.6 trillion (1576% of GDP) and debts of $145.8 trillion (852% of GDP) to produce a net worth of at least $123.8 trillion (723% of GDP){{refn|name=position|group=lower-alpha|See section Estimated financial position, Q1 2014 for calculations.

What happens if you owe the IRS more than $500000? ›

The IRS may take any of the following actions against taxpayers who owe $100,000 or more in tax debt: File a Notice of Federal Tax Lien to notify the public of your delinquent tax debt. Garnish your wages or seize the funds in your bank account. Revoke or deny your passport application.

How much money does the average American make? ›

What Is the Average US Salary (2022) The national average salary is $60,575. That is the sum of all incomes divided by the number of workers. Where someone lives, their industry, education level, and current demand for that job all contribute to how much a worker earns per year.

How come we owe so much in taxes? ›

A: There are many factors that could affect the amount of taxes you owe each year. Some are income related, such as you or your spouse getting a higher-paying job, starting a side business, or receiving an investment windfall. Others are related to major life events—such as getting married, having a child or retiring.

Who pays 70% of taxes? ›

The top 10 percent of earners paid 74 percent of all income taxes and the top 25 percent paid 89 percent. Altogether, the top fifty percent of filers earned 89 percent of all income and were responsible for 97.7 percent of all income taxes paid in 2020.

What salary puts you in the middle class? ›

What Is Middle-Class Income?
Income groupIncome
Low incomeLess than $52,200
Middle income$52,200 - $156,600
Upper incomeMore than $156,600
Feb 27, 2023

Do the rich pay 80% of taxes? ›

Because the top 1 percent paid 42.3 percent of the total federal income tax in 2020 while receiving 22.2 percent of total adjusted gross income, the logic goes, they're getting “soaked.”

Do the rich pay the majority of taxes? ›

In 2020, the latest year with available data, the top 1 percent of income earners earned 22 percent of all income and paid 42 percent of all federal income taxes – more than the bottom 90 percent combined (37 percent).

Does IRS know your race? ›

NBC News: The IRS says it doesn't collect information on race or ethnicity from taxpayers.

Who doesn't pay taxes in USA? ›

Who Does Not Have to Pay Taxes? Generally, you don't have to pay taxes if your income is less than the standard deduction, you have a certain number of dependents, working abroad and are below the required thresholds, or are a qualifying non-profit organization.

Do Native Americans pay taxes? ›

Members of a federally recognized Indian tribe are subject to federal income and employment tax and the provisions of the Internal Revenue Code (IRC), like other United States citizens. Determinations on taxability must be based on a review of the IRC, treaties and case law.

What would happen if no one in the US paid taxes? ›

So the government would have to borrow a lot more money, and the spending would have to go way down. After that, the US economy would begin to go into the tank. So as painful as it is, if you wind up owing taxes, as Oliver Wendell Holmes said, that's the price of civilization.

How does the government know if you don't pay taxes? ›

In order to convict you of a tax crime, the IRS does not have to prove the exact amount you owe. But such charges most often come after the agency conducts an audit of your income and financial situation. Sometimes they're filed after a tax collector detects evasion or fraud.

What city has the highest tax in us? ›

1. Bridgeport, Connecticut. It's no real surprise that one of the wealthiest cities in the U.S. also imposes some of the highest taxes. In Bridgeport, as of 2022, approximately 20% of families that live here report income of $200,000 or more.

What percent is Social Security and Medicare? ›

NOTE: The 7.65% tax rate is the combined rate for Social Security and Medicare. The Social Security portion (OASDI) is 6.20% on earnings up to the applicable taxable maximum amount (see below). The Medicare portion (HI) is 1.45% on all earnings.

How much is the US in debt? ›

The United States has the world's highest national debt at $31.4 trillion. Global debt currently stands at $305 trillion, $45 trillion higher than before the COVID-19 pandemic, according to the Institute of International Finance (IIF) – a global association of the financial industry.

What percentage of the US budget is welfare? ›

The welfare budget of the United States totaled $1.215 trillion in fiscal year 2022, or 19% of all federal outlays. Eight different federal agencies run welfare. This analysis pulls information from the agencies to show a combined federal welfare budget. The listing by welfare program is shown below.

What is the government's largest source of income? ›

In 2023, total federal receipts are projected to total about $4.8 trillion, or 18.4 percent of gross domestic product (GDP). The largest sources of revenues are individual income taxes and payroll taxes followed by corporate income taxes.

How much does the average person spend a month? ›

Average monthly personal expenses in the US are $3,405. Average monthly household expenses in the US are $5,577. The number one category of spending for US households is housing, with the average cost being $1,885 or over 33% (one-third) of total spending. Over 75% of American incomes are devoted to living expenses.

How much money has the US government borrowed from Social Security? ›

The Government Has Borrowed $1.7 Trillion From The Social Security Trust Fund. The government has borrowed the total value of the Trust Fund to pay for other government spending.

How much does the average person spend a day? ›

How much does the average person spend a day? The average person spends about $164 per day, according to the Bureau of Labor Statistics. This figure includes spending on housing, food, transportation, entertainment, clothing, healthcare, and other goods and services.

Who does the US owe most of its debt to? ›

Top 10 territories that own the most U.S. debt

Japan owns the most at $1.1 trillion, followed by China, with $859 billion, and the United Kingdom at $668 billion.

What countries owe the US money? ›

As of January 2023, the five countries owning the most US debt are Japan ($1.1 trillion), China ($859 billion), the United Kingdom ($668 billion), Belgium ($331 billion), and Luxembourg ($318 billion).

What net worth is considered upper class? ›

You might need $5 million to $10 million to qualify as having a very high net worth while it may take $30 million or more to be considered ultra-high net worth. That's how financial advisors typically view wealth.

What money can the IRS not take? ›

Assets the IRS Can NOT Seize

Work tools valued at or below $3520. Personal effects that do not exceed $6,250 in value. Furniture valued at or below $7720. Any asset with no equitable value.

How much money is suspicious to the IRS? ›

A person may voluntarily file Form 8300 to report a suspicious transaction below $10,000. In this situation, the person doesn't let the customer know about the report. The law prohibits a person from informing a payer that it marked the suspicious transaction box on the Form 8300.

What accounts can the IRS not touch? ›

IRS can not seize any amount payable to an individual as a recipient of public assistance and also assistance under Job Training Partnership Act. IRS can not seize residences exempt in small deficiency cases, principal residences, and also certain business assets exempt in the absence of certain approval or jeopardy.

How much does the average American have in their bank account? ›

How much do you currently have in your savings account? For nearly a third of average Americans, this number is $100 or less. GOBankingRates recently surveyed 1,000 Americans ages 18 and older to learn more about their banking practices and found that 32.9% have no more than $100 in their savings account.

What is considered upper middle class? ›

Many have graduate degrees with educational attainment serving as the main distinguishing feature of this class. Household incomes commonly exceed $100,000, with some smaller one-income earners household having incomes in the high 5-figure range.

What is the average high salary in USA? ›

Salary by Age and Gender in the U.S.
AgeFemale Median Annual WageMale Median Average Hourly Wage
25 to 34 years old$50,440$27.13
35 to 44 years old$57,824$33.23
45 to 54 years old$57,096$34.73
55 to 64 years old$54,288$34.83
3 more rows
May 23, 2023

Do owe taxes ever go away? ›

Once a lien arises, the IRS generally can't release the lien until the tax, penalty, interest, and recording fees are paid in full or until the IRS may no longer legally collect the tax. Paying your tax debt in full is the best way to get rid of a federal tax lien.

Is it better to owe taxes or get a refund? ›

Underestimating your tax burden and not having enough money withheld from your paycheck will cause you to owe the IRS. Nobody likes to owe taxes, but sometimes it actually is the best tax strategy. “In most cases it's better to owe than to receive a refund,” says Enrolled Agent Steven J. Weil, Ph.

Do you get a bigger refund if you make less money? ›

The less money you have withheld, the more money you'll get in each check and the smaller your tax refund will be. Just keep in mind that if you reduce your withholdings too much, you'll end the year with an outstanding balance and the IRS will be dropping off a tax bill when you file your returns.

Who pays 50% in taxes? ›

The top 50 percent of all taxpayers paid 97.7 percent of all federal individual income taxes, while the bottom 50 percent paid the remaining 2.3 percent.

Who pays the lowest taxes in the US? ›

In 2020, the average American contributed 8.9% percent of their income in state taxes. Alaska had the lowest average overall tax burden – measured as total individual taxes paid divided by total personal income – at 5.4%, followed by Tennessee (6.3%), New Hampshire (6.4%), Wyoming (6.6%) and Florida (6.7%).

What does the top 1% pay in taxes? ›

The Internal Revenue Service recently released its income and tax statistics for 2020, and they show the top 1% of earners paid 42.3% of the country's income taxes. That's a two-decade high in the share of taxes the 1% pay.

How much does the average middle class American pay in taxes? ›

Among those taxpayers, the average income tax rate was 14.6% and the average tax paid was $20,663. The OECD reported that the U.S. "tax wedge" for the average single worker was 28.4% in 2021.

How much tax do billionaires pay? ›

Since 2020, the richest 1 percent have captured almost two-thirds of all new wealth. According to a 2021 White House study, the wealthiest 400 billionaire families in the US paid an average federal individual tax rate of just 8.2 percent. For comparison, the average American taxpayer in the same year paid 13 percent.

How many Americans pay no income tax? ›

An estimated 72.5 million households -- or 40% of total households -- will pay no federal income taxes for tax year 2022, according to an analysis from the Tax Policy Center.

Why do the poor pay more taxes? ›

Taxes: Sales taxes are highly regressive, with poor families in the U.S. paying nearly eight times more of their income in sales taxes than the wealthiest families due to spending more of their smaller paychecks on buying goods, and having less left over to save and invest.

Is it better to live in a state with no income tax? ›

States that have no income tax aren't excessively wealthy and benevolent. They simply have a different structure for raising revenue. With no income tax dollars coming in, these states must get that revenue from other sources. Typically, this translates to higher sales taxes, property taxes and/or gasoline taxes.

What state has highest property tax? ›

1. New Jersey. New Jersey earns the top spot as highest property taxes not only in property tax rate, which is over the 2% mark, but in the actual dollars spent in property taxes; here the average home value is the highest on the list.

How many taxpayers are in the top 1%? ›

The top one percent of earners, which numbered nearly 1.6 million filers, had adjusted gross incomes of more than $548,000 and paid an average tax rate of 26 percent. The tax rate was eight times the rate faced by the bottom half of taxpayers, who earned less than $42,000 and paid an average tax rate of 3.1 percent.

How much wealth does the 1% own? ›

According to Credit Suisse, individuals with more than $1 million in wealth sit in the top 1 percent bracket. The billionaire class is $2.6 trillion richer than before the pandemic, even if billionaire fortunes slightly fell in 2022 after their record-smashing peak in 2021.

Where does tax money go? ›

“Income security” and other benefits include federal employee retirement and disability, veterans' benefits, unemployment benefits, and welfare programs such as food and housing aid. Overall, two‐​thirds of government spending in 2022 went to pay some sort of benefit to someone.

Do billionaires pay less taxes than working class? ›

But when a billionaire earns income because their investments increase in value, that gain is too often never taxed at all. America's imbalanced tax code means that many millionaires and billionaires end up paying lower tax rates than middle class workers.


Top Articles
Latest Posts
Article information

Author: Prof. An Powlowski

Last Updated: 04/11/2023

Views: 6087

Rating: 4.3 / 5 (64 voted)

Reviews: 95% of readers found this page helpful

Author information

Name: Prof. An Powlowski

Birthday: 1992-09-29

Address: Apt. 994 8891 Orval Hill, Brittnyburgh, AZ 41023-0398

Phone: +26417467956738

Job: District Marketing Strategist

Hobby: Embroidery, Bodybuilding, Motor sports, Amateur radio, Wood carving, Whittling, Air sports

Introduction: My name is Prof. An Powlowski, I am a charming, helpful, attractive, good, graceful, thoughtful, vast person who loves writing and wants to share my knowledge and understanding with you.