What Is the Average Effective Tax Rate by Income?

The average effective federal income tax rate by income runs from about 3.7% for the bottom half of filers to roughly 26.1% for the top 1%, according to IRS data for tax year 2022.¹ That spread exists because the federal income tax is progressive and because deductions, credits, and preferential rates on investment income reshape each filer’s actual bill. Your effective rate is the single best number for understanding what you really owe relative to what you earn, and it always lands well below the bracket rate people tend to quote.

Effective Rate vs. Marginal Rate

Your effective tax rate is total federal income tax divided by total income. Earn $80,000, owe $9,400, and your effective rate is about 11.8%. That one number folds in every bracket, deduction, and credit that touched your return.

Your marginal rate is different. It’s the rate that applies to your last dollar of income. Because income is taxed in layers, your marginal rate is always higher than your effective rate.² Someone “in the 24% bracket” pays 24% only on the income sitting above that bracket’s threshold; everything below it was taxed at lower rates. Marginal matters when you’re weighing the tax cost of one more dollar. Effective matters for almost everything else.

Average Effective Federal Income Tax Rate by Income Group

The most recent IRS data, covering tax year 2022, shows a clear staircase. These figures reflect federal income tax only and exclude payroll taxes and state taxes.¹

Bottom 50% (AGI below $50,339): average effective rate of 3.7%, average tax bill of $822.
Top 25% to 10% (AGI roughly $96,044 to $178,611): average effective rate of about 9% to 12%.
Top 10% to 5% (AGI $178,611 to $261,591): average effective rate of 14.3%.
Top 1% (AGI above $663,164): average effective rate of 26.1%, average tax bill of about $561,500.

The top 1% earned about 22.4% of all adjusted gross income and paid 40.4% of all federal income taxes collected. The bottom 50% earned 11.5% of AGI and paid 3.0% of income taxes.¹ Those shares are how progressivity shows up in practice, not just on paper.

A caveat about the trend. Effective rates dropped noticeably during 2020 and 2021 because of pandemic relief and expanded credits, then rebounded. The bottom half’s rate rose from 3.3% in 2021 to 3.7% in 2022. The top 1% edged from 25.9% to 26.1%.¹

Why the Effective Rate Sits Below the Bracket Rate

Brackets tax only taxable income, which is what’s left after deductions. That gap is the biggest reason effective rates trail marginal rates.

The 2026 standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household.³ Most filers take it. A single wage earner making $50,000 has only about $33,900 in taxable income before anything else, so the first thing shrinking the effective rate is that a chunk of income isn’t taxed at all.

Credits do the rest, and they hit harder than deductions because they reduce tax dollar-for-dollar.⁴ The Earned Income Tax Credit is fully refundable and can be worth up to $8,231 in 2026 for a family with three or more children; a single filer with no children can claim up to $664.³ The Child Tax Credit, raised to $2,200 per qualifying child under the One, Big, Beautiful Bill Act, is partially refundable, with 15% of earned income above $2,500 available as the Additional Child Tax Credit when the credit runs past your tax liability.⁵ These credits are why the bottom half of filers pays such a low average effective rate. For millions of households, they wipe out the income tax that brackets would otherwise impose.

Why People at the Same Income Can Pay Very Different Rates

Two households with identical AGI can land at quite different effective rates, and the biggest reason is the type of income.

Investment Income Is Taxed Lower

Wages face ordinary rates up to 37%. Long-term capital gains and qualified dividends face a separate schedule that tops out at 20%.⁶ For 2026, single filers pay 0% on long-term gains up to $49,450 in taxable income, 15% from there to $545,500, and 20% above that. For joint filers the 15% bracket runs from $98,901 to $613,700, with 20% above that.⁷

The practical effect is large. A single filer with $400,000 of long-term capital gains pays a materially lower effective rate than a single filer with $400,000 of salary. This is the main reason very high earners can post effective rates below what their raw income might suggest: much of their income is investment income.

Self-Employment Pushes the Rate Up

The move runs the other way for the self-employed. Freelancers and sole proprietors pay both halves of Social Security and Medicare, a combined 15.3% self-employment tax on top of regular income tax.⁸ Half of that self-employment tax is deductible when figuring AGI, which trims the income tax, but the self-employment tax itself doesn’t shrink. A freelancer’s total federal burden runs noticeably higher than a W-2 worker’s at the same gross income.

Payroll Taxes Change the Picture

The income-tax-only rates leave out something most working Americans pay every check. Employees owe 6.2% of wages toward Social Security on earnings up to $184,500 in 2026, plus 1.45% toward Medicare on all wages with no cap.⁹ Employers pay matching amounts. Together that’s 15.3% on earnings up to the Social Security wage base.¹⁰

Because the Social Security portion stops at $184,500, someone earning $60,000 pays 6.2% on every dollar of wages, while someone earning $500,000 pays it on less than 37% of theirs. Add payroll taxes to income taxes and the middle-income picture shifts. A household at $70,000 might pay an effective income tax rate under 8%, but the employee-side payroll tax of 7.65% brings the total federal bite closer to 15% or 16%. Worth keeping in mind when you compare your own numbers against the income-tax-only averages above.

How to Calculate Your Own Effective Rate

Pull your Form 1040. Divide line 24 (total tax) by line 15 (taxable income) for the effective rate on taxable income. Divide line 24 by line 9 (total income) for the broader measure, which is what most published averages use because it captures how much of your full earnings actually went to federal income tax.

For the full federal burden, add the employee-side Social Security and Medicare taxes from your W-2 (or your self-employment tax from Schedule SE) to your income tax, then divide by total income. That combined figure is almost always several points higher than the income-tax-only number, and it’s the honest answer to what the federal government took from your work.

1
Tax Foundation. Summary of the Latest Federal Income Tax Data, 2025 Update
2
Internal Revenue Service. Federal Income Tax Rates and Brackets
3
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill
4
Internal Revenue Service. Tax Credits for Individuals: What They Mean and How They Can Help Refunds
5
Internal Revenue Service. Refundable Tax Credits
6
Internal Revenue Service. Topic No. 409, Capital Gains and Losses
7
Tax Foundation. 2026 Tax Brackets and Federal Income Tax Rates
8
Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes)
9
Social Security Administration. Contribution and Benefit Base
10
Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet