Tax season officially kicks off Friday as the IRS will begin to accept tax returns for the 2020 tax year. As a reminder the IRS is recommending e-filing your taxes. However, this year’s tax season starting in the middle of a pandemic, which also impacted the previous tax year’s processing has left the IRS months behind when processing paper returns. If you’re expecting a refund, you might have to wait 3 months or more if you file through the mail compared to only a couple of weeks or less on average if you e-file.
As we’re entering the new tax season, here’s an updated look at who pays what in federal income taxes based on the most recent information available from the IRS.
- Top 1%: paid 40%
- Top 5%: paid 60%
- Top 50%: paid 97%
- Bottom 50%: paid 3%
What’s more is it’s now evidenced that the Trump tax policy increased the tax burden on upper income earners while decreasing the burden on those who earn the least. The total tax burden of the top 1% increased from 38% to 40% under the Trump tax policy, while the burden decreased from 3.11% to 2.94% on those the bottom 50% of earners. This was largely the effect of limiting tax deductions that many upper income earners took advantage of previously, while expanding the standard deduction which most Americans use when they file. In fact, the federal tax burden has never been lower for those with below average income.
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