How Much Does the Average American Pay in Taxes?

The U.S. progressive tax system makes it difficult to pin down an “average” taxpayer. There are seven tax brackets, ranging from 10% to 37%, so the average tax rate might be expected to be 24.57%. Conveniently, there is a 24% tax bracket. So is this what the average American pays in taxes? Not really. One measure reports a figure of 13.3% for all taxpayers. Another measure puts it at more than 28%. Here’s how it breaks down.

How Tax Brackets Impact Rates

The 24% bracket applies only to income from $89,075 through $170,150, at least for single taxpayers. These income thresholds vary by filing status. Here’s how the brackets for the single filing status break down for tax year 2022:

The 24% rate wouldn’t affect an unmarried taxpayer earning $35,000 a year. They would be in the 12% tax rate bracket—but only on income over $10,275. The first $10,275 would be taxed at just 10%.

'Median' Might Be a Better Term

It might be easier to understand the median tax burden of American taxpayers instead. The median is the number that falls in the middle of a data set. Theoretically, half of all taxpayers would pay less than a median figure, and half would pay more.

The top 50% of taxpayers paid 97.1% of all federal income taxes in 2018, the last tax year for which comprehensive and vetted statistics are available, according to the Tax Foundation. As a result, the bottom 50% paid just 2.9%.

But this is just one way of looking at the equation. There’s also something known as the “tax wedge,” and the figures from the Tax Foundation reflect only income taxes. Social Security and Medicare also take a percentage of Americans’ earnings. Technically, these should be considered when weighing an average tax burden.

The Tax Wedge

The tax wedge is the ratio between what the average worker takes home after taxes and their employer's total labor costs (which includes taxes and benefits and other costs, in addition to wages).

The Organisation for Economic Co-Operation and Development (OECD) calculates tax wedges annually for the U.S. and dozens of other developed countries. The tax wedges are based on the pay and tax brackets of single individuals, and the idea is that the higher the tax wedge, the less likely it becomes that some taxpayers will see any benefit in holding down a job.

Calculating the Tax Wedge

Tax wedge calculations include income taxes and FICA taxes—Social Security, Medicare, and the Additional Medicare tax, where applicable. But the federal income tax represents the biggest burden on American taxpayers.

Employers’ and employees’ Social Security and Medicare shares are used to calculate the OECD tax wedge. Even if an employee doesn’t have to pay their employer’s share out of pocket, that money would have otherwise been paid to them without that contribution. The Social Security tax rate for wages paid in 2022 is set at 6.2% for both employers and employees, while the rate for self-employment income is 12.4%. The Medicare tax takes 1.45% for employers and employees and 2.9% for self-employed individuals.

The U.S. Tax Wedge

The OECD reported that the U.S. tax wedge for the average single worker increased by 1.2 percentage points from 27.2% in 2020 to 28.4% in 2021, which is less than the OECD average for all countries—34.6% in the same year. Meanwhile, after taxes and benefits, the take-home pay of an average single U.S. worker was 77.4% of their gross wage, compared with the OECD average of 75.4%.

According to the OECD, COVID-19 pandemic-based legislation is thought to have contributed to the tax wedge decrease.

So what does this mean in dollars? Assuming a median yearly salary of $53,924, a tax wedge of 28.4% works out to about $15,314.42, meaning the average worker contributed that much to the federal government.

The OECD tax wedge only includes these three taxes: income, Social Security, and Medicare. It doesn’t include sales, property, vehicle, or state income taxes.

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