What’s the proper way to tax personal saving and investment? It’s a great question, and under current tax law, we have lots of different answers! Specifically, we have four of them, which I’ll get to in a moment. But...
- The Tax Policy Blog
- The Average U.S. Worker Pays over $16,000 in Income and P...
The Average U.S. Worker Pays over $16,000 in Income and Payroll Taxes
The average U.S. worker faces a tax burden of 31.3 percent. This includes both income taxes and payrolls taxes. Between these two types of taxes, the average U.S. workers pays over $16,000 in taxes on their labor.
The tax burden is a combination of income taxes at the federal, state, and local levels as well as the employee and the employer payroll taxes. Of the 31.3 percent tax burden, 15.4 percent is due to income taxes and 15.9 percent is due to payroll taxes, over half of which is paid by the employer on the employee’s behalf. (Workers pay the cost of the employer-side payroll taxes through lower wages.)
In total, the average worker pays $8,196 in income taxes and $8,462 in payroll taxes, which are meant to fund programs such as Social Security and Medicare.
In the absence of the $16,658 in taxes and any benefits they provide, the average worker would take home $53,223 in income, as opposed to the current after-tax income of $36,564 for the average worker.
To read more about the tax burden on U.S. labor as well as an international comparison, see here.
Get Email Updates from the Tax Foundation
We will never sell or share your information with third parties.
Join the Tax Foundation's fight for sound tax policy Go
About the Tax Policy Blog
The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.