Most Americans have multiple sources of income, and not all sources of income are treated the same by the 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. code. Using recently released IRS data, the following table shows, by 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.” group, the share of each group’s total income that comes from various sources. For example, the table shows that for tax returns with an AGI of over $10 million, only 16 percent of total income comes from wages and salaries, while over 62 percent comes from capital gains and dividends. At the bottom of the income spectrum, however, it’s clear that wages are the predominant income source. (Note those tax returns with AGI of less than $10,000 should be taken with caution given that some of these returns are of taxpayers with usually high incomes yet large losses.)
This table shows the degree to which the income profiles of tax returns vary by the tax returns’ differing income levels. Business income includes income from schedules C, E, and F less income from trusts and estates. Total income (the denominator in each of these percentages is not AGI but rather AGI plus statutory adjustments a.k.a. above-the-line deductions.)
| AGI Group | Salaries/Wages | Taxable Interest | Cap Gains/Dividends | Biz Income | Taxable Retirement | Taxable S.S. | All Other |
| All Returns | 66.31% | 3.04% | 12.99% | 7.95% | 7.25% | 1.90% | 0.56% |
| 1-5k | 87.27% | 4.62% | 4.53% | 4.46% | 5.94% | 0.11% | -6.93% |
| 5-10k | 75.45% | 2.97% | 3.02% | 10.41% | 7.79% | 0.09% | 0.27% |
| 10-15k | 71.21% | 3.21% | 2.39% | 9.76% | 11.46% | 0.09% | 1.89% |
| 15-20k | 76.89% | 2.69% | 2.28% | 5.18% | 10.89% | 0.20% | 1.88% |
| 20-25k | 81.07% | 2.21% | 1.92% | 3.24% | 9.37% | 0.67% | 1.52% |
| 25-30k | 81.73% | 1.83% | 1.81% | 3.01% | 8.96% | 1.28% | 1.39% |
| 30-40k | 81.86% | 1.91% | 1.68% | 2.63% | 8.64% | 2.00% | 1.28% |
| 40-50k | 80.41% | 1.81% | 2.01% | 2.78% | 8.91% | 2.79% | 1.29% |
| 50-75k | 77.47% | 2.10% | 2.80% | 2.69% | 9.88% | 3.74% | 1.32% |
| 75-100k | 76.45% | 2.16% | 3.58% | 3.48% | 9.80% | 3.38% | 1.14% |
| 100-200k | 73.17% | 2.32% | 6.22% | 5.91% | 8.93% | 2.23% | 1.22% |
| 200-500k | 59.62% | 3.25% | 13.87% | 15.22% | 5.22% | 1.22% | 1.60% |
| 500k-1m | 47.27% | 3.77% | 22.89% | 21.62% | 2.15% | 0.57% | 1.73% |
| 1-1.5m | 38.90% | 4.42% | 28.38% | 24.48% | 1.37% | 0.34% | 2.11% |
| 1.5-2m | 35.13% | 4.55% | 32.03% | 24.85% | 1.01% | 0.25% | 2.19% |
| 2-5m | 31.75% | 4.80% | 37.24% | 23.08% | 0.63% | 0.15% | 2.35% |
| 5-10m | 26.75% | 5.23% | 46.37% | 18.98% | 0.39% | 0.07% | 2.21% |
| 10m+ | 16.02% | 6.47% | 62.33% | 12.57% | 0.14% | 0.02% | 2.46% |