Menu

Tax & Accounting News

Only 40% of American Households Won't Pay Income Tax This Year

by
Rebekah Barton
on
10/31/2022
Only 40% of American Households Won't Pay Income Tax This Year

According to data from the bipartisan Tax Policy Center, only 40% of American households won't pay income tax this year.

Attaching the word "only" to 40% -- close to half of all households from coast to coast -- might seem odd to the average layperson, but to economists it is great news. It means more and more families nationwide are earning enough money to require tax payments. 

Howard Gleckman, senior fellow at the Tax Policy Center, spoke to MarketWatch, indicating that this is a notable decrease from the height of the pandemic when approximately 60% -- or 100 million -- households did not have to pay federal income taxes. 

Early in the pandemic, company closures, furloughs, and layoffs led to high levels of unemployment, ultimately exempting many people from paying income taxes. It is worth noting that even in the years just before the pandemic, 42-43% of households did not earn enough to be taxed at the federal level. 

Thus, this year's 40% number is encouraging to those who closely watch the United States economy.

This does not mean, however, that fears of a recession should be laid to rest. Between rising energy costs and high levels of inflation, post-pandemic economic recovery is still shaky. 

Billie Atchison, a tax expert from BA Accounting, commented that it is imperative for Americans to be aware of tax policy changes in order to best manage their finances. 

She said, "The tax laws are always changing! We have to keep up to date on all these changes."

For example, the IRS recently altered its standard deduction limits for the 2023 tax year. In an official release, the agency shared specifics regarding the new standard deduction rules:

The standard deduction for married couples filing jointly for tax year 2023 rises to $27,700 up $1,800 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $13,850 for 2023, up $900, and for heads of households, the standard deduction will be $20,800 for tax year 2023, up $1,400 from the amount for tax year 2022.

The tax agency also noted that the top tax rate will remain 37% for single filers with incomes greater than $578,125 and $693,750 for married couples filing jointly.

What do you think about the fact that only 40% of American households were exempt from income taxes this year?

You Might Also Enjoy:

- Dozens of Capitol Hill Dems. Urge Extended Child Tax Credit

- Sen. Ron Johnson Comes Under Fire, Family Wrote Off Entire Private Plane Purchase Price

- Donald Trump Paid Fewer Taxes Than Americans Making $20,000 a Year

share this post
Search for matches...
Rebekah Barton

Rebekah Barton

Rebekah's search engine optimization career began completely by accident as a college student. Over the course of her career so far, she has "grown up" with the SEO industry, from writing content while juggling classes to managing her own teams of writers and overseeing SEO strategy in subsequent roles. She is excited to bring her passion for high-quality content to CountingWorks, Inc.

Recommended Professionals

In the face of economic uncertainty, TaxBuzz is the industry's most up-to-date tax information.

Join 60,000 who get our weekly newsletter. No spam.

Need help selecting a firm?

Use our specialized search engine and get matched to the best accounting and tax firm for your needs.

Get Started

Related Posts

Latest Posts