One of the most overlooked explanations for the difference in income between taxpayers is the issue of life cycle. Our income tends to grow as we mature and gain work experience, reaching its peak as we near retirement. As this chart illustrates, the average income for taxpayers age 55 to 65 is nearly $82,000—well above the $57,606 average for all taxpayers. Even taxpayers over age 65 make more than the national average. As the Baby Boomer generation moves into its peak earnings years, there will be more high-income taxpayers than younger low-income ones, giving the appearance of rising inequality.
For more charts like the one below, see the second edition of our chart book, Putting a Face on America's Tax Returns.
