Bottom 50% Federal Income Tax Share: Why 3.3% and What It Omits

The bottom 50 percent federal income tax share was 3.3 percent in Tax Year 2023, according to IRS Statistics of Income data compiled by the Tax Foundation.¹ That means the lower-earning half of filers, taken together, paid about three cents of every dollar of federal individual income tax the government collected. The top half paid the other 96.7 percent. The figure covers federal income tax only, not payroll taxes or other federal taxes, and that distinction matters more than any single number in the story.

Who Counts as the Bottom 50 Percent

The IRS ranks filers each year by adjusted gross income (AGI), which is total income minus specific adjustments claimed on Schedule 1 of Form 1040, such as student loan interest and educator expenses.² The midpoint of that ranking is the dividing line. For Tax Year 2022, the most recent year with a published threshold, the line sat at $50,339 in AGI.³ Anyone who filed a return below that amount fell into the bottom half.

The line moves each year with wages and inflation. It was roughly $46,600 in 2021 and about $39,275 back in 2015.⁴ Of roughly 160.6 million individual returns filed for Tax Year 2023, the bottom half amounts to about 80 million returns — part-time workers, entry-level employees, retirees on modest pensions, gig workers, and anyone else whose reported income lands below that year’s midpoint.

What the Bottom Half Actually Pays

In Tax Year 2023, the bottom 50 percent earned 12.3 percent of total AGI and paid 3.3 percent of all federal individual income taxes.¹ Their average effective income tax rate came out to about 3.7 percent. For each dollar of AGI in this group, less than four cents went to federal income tax on average.

A large slice of the group pays nothing. Roughly 49 million of the 160.6 million returns filed for Tax Year 2023 (about 30.5 percent) showed zero federal income tax liability. Those zeros pull the group’s collective share down sharply, and they do so before you even account for refundable credits that come back as cash refunds.

Why the Share Is So Small

Two features of the code do most of the work.

The Standard Deduction

For 2026, the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly.⁵ That deduction erases the first $16,100 or $32,200 of income before any tax is calculated. A single filer earning $40,000 has only $23,900 exposed to tax. For anyone near or below the national median income, that alone drives the effective rate down close to the floor.

Refundable Credits

The Earned Income Tax Credit is a direct payment to low- and moderate-income working filers.⁶ For 2026 the maximum ranges from $664 for a filer with no children to $8,231 for a filer with three or more children.⁷ Because the credit is refundable, a filer who owes $500 but qualifies for a $4,427 EITC zeros out the tax bill and receives the remaining $3,927 as a refund.

The Child Tax Credit works the same way. It’s $2,000 per qualifying child under current law, with a refundable portion available even when no tax is owed.⁸ The full credit is available to single filers earning up to $200,000 and joint filers up to $400,000, with the refundable portion phasing in based on earned income above $3,000.⁹

Together, these credits zero out income tax liability for millions of filers each year, and often exceed what the filer owed in the first place.

What the 3.3 Percent Figure Leaves Out

Two things about the number are worth holding on to before you use it in any argument.

First, refundable credit payouts don’t reduce the reported tax share. The Office of Management and Budget classifies refundable credit outlays as government spending rather than negative taxes, so the IRS math treats them accordingly.³ The 3.3 percent share is what the group paid in gross income tax; if the refunded portion of EITC and Child Tax Credit dollars were netted out, the share would be lower still.

Second, income tax is only one federal tax. Social Security and Medicare taxes under the Federal Insurance Contributions Act take 7.65 percent of every paycheck (6.2 percent for Social Security plus 1.45 percent for Medicare), with employers matching.¹⁰ Social Security tax applies only on the first $176,100 of wages in 2025, so lower earners often pay a higher percentage of their total income in payroll taxes than wealthier filers do. A worker earning $35,000 loses roughly $2,678 to payroll taxes on the employee side alone, even if their income tax after credits is zero. Any tally that includes all federal taxes puts the bottom 50 percent’s share well above 3.3 percent.

The Long Trend

The bottom half’s share of income tax has been falling for decades. It was about 7 percent in 1980, around 4.9 percent by 2001, and 3.0 percent in 2022.¹¹³ The 2023 reading of 3.3 percent is a slight uptick, but the long-run direction is down.

Two forces drive that. Congress has repeatedly enlarged the standard deduction, the EITC, and the Child Tax Credit, each expansion pulling more lower- and middle-income filers under the threshold where any income tax is owed. And income growth at the top has outpaced growth at the bottom, so a larger share of taxable income (and the tax on it) sits with higher earners each year. The Tax Cuts and Jobs Act of 2017 accelerated both dynamics by roughly doubling the standard deduction and lowering rates across the brackets.

That framework is now locked in for the near future. The One, Big, Beautiful Bill Act, signed on July 4, 2025, made the TCJA individual rate structure permanent, keeping the seven brackets at 10, 12, 22, 24, 32, 35, and 37 percent rather than letting them revert to pre-2018 rates that would have topped out at 39.6 percent.⁵ The generous standard deduction and low initial brackets that keep the bottom half’s income tax share small are staying in place.

1
Tax Foundation. Summary of the Latest Federal Income Tax Data, Tax Year 2023
2
Internal Revenue Service. Adjusted Gross Income
3
Tax Foundation. Summary of the Latest Federal Income Tax Data, 2025 Update
4
Internal Revenue Service. Statistics of Income Bulletin
5
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments from the One, Big, Beautiful Bill
6
Office of the Law Revision Counsel. 26 USC 32 – Earned Income
7
Tax Foundation. 2026 Tax Brackets and Federal Income Tax Rates
8
Office of the Law Revision Counsel. 26 USC 24 – Child Tax Credit
9
Internal Revenue Service. Child Tax Credit
10
Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates
11
National Taxpayers Union. Who Pays Income Taxes?