From <a href="https://www.zerohedge.com/"Zero Hedge
61% Of Taxpayers, Or More Than 100 Million US Households, Paid No Federal Income Taxes Last Year
The majority of US taxpayers – 61% – paid no federal income taxes last year due to the pandemic and ensuing policy response, according to CNBC, citing a new report by the Tax Policy Center.
The pandemic and federal stimulus led to a huge spike in the number of Americans who either owed no federal income tax or received tax credits from the government. According to the Urban-Brookings Tax Policy Center, 107 million households owed no income taxes in 2020, up from 76 million — or 44% of all taxpayers — in 2019. -CNBC
“It’s a really big number,” said Tax Policy Center fellow, Howard Gleckman, adding “It’s also really transitory.”
According to Gleckman, high unemployment combined with large stimulus checks and generous tax credit programs (set to expire after 2022) account for the majority of the spike. He expects the share of nontaxpayers to fall starting next year.
The share of Americans who pay zero income taxes is expected to stay high, at around 57% this year, according to the Tax Policy Center. It’s expected to fall back down to 42% in 2022 and remain at around 41% or 42% through 2025, “assuming the economy continues to rebound and several temporary tax benefits expire as scheduled,” Gleckman said. -CNBC
Helping to ease the tax burden were pandemic-related increases in the child tax credit, the earned income tax credit, and the child and the dependent care tax credit – which together erased federal taxes owed for millions of American families.
This year, no household making under $28,000 will pay any federal taxes due to the credits and tax changes, according to the report – whereas around 43% of middle-income households are expected to pay federal income tax. According to Gleckman, the offsets in dollar terms were small for many families.
“Imagine somebody who would have owed $1,500 in 2020 income tax until they got two stimulus payments — $1,200 in April and $600 in December,” he told CNBC. “That threw them into the category of nonpayers. While the payments resulted in a large percentage increase in their after-tax income, the dollar amount of their tax cut was only a tiny fraction of a high-income filer who received a tax cut of, say, $30,000 from the 2017 [Tax Cuts and Jobs Act], yet still owed some tax.”
In 2020, the top 20% of taxpayers paid 78% of federal income taxes, according to the Tax Policy Center, which was up from 68% in 2019. The top 1% of taxpayers paid 28% of taxes in 2020, up from 25% in 2019.