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2005 Tax Year Was a Grand Slam, And Now You Can Look It Up

1 min readBy: William Ahern

It’s exasperating to wait two years for preliminary data on income taxes, but 134.5 million taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. returns can’t be tallied overnight.

That’s how many tax returns American individuals filed in the spring of 2006 when paying 2005’s taxes, according to new data from the IRS’s Statistics of Income Division.

Other important numbers for tax year 2005, compared to 2004:

Up 8.9 percent: Adjusted Gross IncomeFor individuals, gross income is the total pre-tax earnings from wages, tips, investments, interest, and other forms of income and is also referred to as “gross pay.” For businesses, gross income is total revenue minus cost of goods sold and is also known as “gross profit” or “gross margin.” rose to $7.4 trillion.

Up 9.5 percent: Taxable incomeTaxable income is the amount of income subject to tax, after deductions and exemptions. For both individuals and corporations, taxable income differs from—and is less than—gross income. rose even faster than AGI, to $5.1 trillion.

Up 11.8 percent: The only thing that grew faster than income was taxes, to $928.3 billion.

Up 8.4 percent: Total income tax deductions rose to $1,665.6 billion.

Up 5.7 percent: Total income tax credits (subtracted from liabilities) rose to $54.3 billion.

Up 6.1 percent: Total earned income credit, including the refundable portion, rose to $43.1 billion.

In many cases, 2005 was a statistical re-run of 2004, which had set a staggering standard for rising incomes and tax payments. The new winter issue of the SOI Bulletin also carries final data for tax year 2004.

Some different items from the 2004 series:

  • 67.4 percent of the tax returns filed that year were taxable returns. That means 43.1 million tax returns were filed by people who were “non-payers,” i.e. they got back every dollar withheld from their paychecks during the year. That left 89.9 million tax returns who paid the freight.
  • On these taxable returns, the average tax rateThe average tax rate is the total tax paid divided by taxable income. While marginal tax rates show the amount of tax paid on the next dollar earned, average tax rates show the overall share of income paid in taxes. rose for the first time in four years, up from 13.0 percent in 2003 to 13.3 percent for 2004.
  • Taxpayers with an AGI of at least $328,049, the top 1 percent of taxpayers, accounted for 19 percent of total AGI and 36.9 percent of the total income tax paid during 2004.