Individual taxes are the largest source of revenues for the federal government, representing more than half of all revenues collected. They include taxes levied on wages and salaries, income from investments, and other income.
The individual tax code is progressive, meaning that those with higher incomes pay a greater share of their earnings in taxes. At the same time, high earners benefit disproportionately more from tax expenditures, also known as “tax breaks,” than lower earners.
Many economists agree that simplifying the tax code could have fiscal and economic benefits. Tax reform done right would promote economic growth, make our fiscal outlook more sustainable, reduce the complexity and burden of compliance, and increase the system’s transparency and fairness by treating individuals and businesses in similar circumstances more equally.
Below is a selection of key charts on individual income taxes in the United States and how they fit within the federal budget.
Attribution Policy: If you would like to use any of these charts, please credit the "Peter G. Peterson Foundation" and provide the pgpf.org website URL and hyperlink. If you would like to include one of our charts in a commercial product, please email copyright@pgpf.org.
Further Reading
How Does the Capital Gains Tax Work, and What Are Some Proposed Reforms?
While the capital gains tax affects anyone selling a capital asset, higher-income individuals are typically subject to the tax more so than average Americans.
What Is the SALT Cap?
The deduction of state and local tax payments from federal income taxes has been a subject of debate among economists and policymakers over the past few years — with significant implications for our budget and fiscal outlook.
Infographic: How the U.S. Tax System Works
One issue that most lawmakers and voters agree on is that our tax system needs reform.