US Tax Filers Pay Average 13.8% Tax Rate

by Glen Shapiro, LawAndTax-News.com, New York

05 March 2009

The average tax rate for taxable returns filed with the US Internal Revenue Service in 2006 was 13.8%, an increase of approximately 0.2% from 2005, according to the winter 2009 issue of the Statistics of Income Bulletin.

The Bulletin, released on March 3, features information on 138.4 million individual income tax returns filed for tax year 2006. Of those returns, about 93 million, or 67%, were taxable, which means that the taxpayer reported total income tax greater than zero. The total number of taxable returns in tax year 2006 was up 2.4% from 2005.

Adjusted gross income on these 93 million returns totaled more than USD7.4 trillion, which was up 8.5% from 2005. Total income tax on these returns totaled approximately USD1 trillion, up 9.5% from 2005. Adjusted gross income is total income, as defined by the tax code, less statutory adjustments - primarily business, investment or certain other deductions.

Taxpayers in the top 1% of adjusted gross income reported adjusted gross income of at least USD388,806 in tax year 2006. This group accounted for 22.1% of all adjusted gross income for 2006, up 0.9% from the prior year. This group also accounted for 39.9% of the total income tax reported, an increase from 39.4% in 2005.

Taxpayers in the top 5% of adjusted gross income reported adjusted gross income of at least USD153,542. This group accounted for 36.7% of adjusted gross income and 60.1% of total income tax.

The Bulletin also shows that split-interest trusts reported USD12.2bn in total net income in filing year 2007, an increase of 22.1% since 2006. Charitable and other tax-exempt organizations reported more than USD10bn in gross unrelated business income for tax year 2005.

Foreign persons received USD378.4bn in US source income during tax year 2005, according to the Bulletin, and USD333.2bn of that amount, or 88.0%, was exempt from withholding taxes. For tax year 2005, interest payments accounted for 56% (USD211.8bn) of total income paid to foreign recipients.

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