For most of us, the barrier to entry into the top 1% of income earners is pretty well out of reach. But for you strivers out there, it might be useful to know what it will take.
Last week the Internal Revenue Service (IRS) released data culled from 2015 income tax returns. In order to join the top 1% of earners 1.4 million out of 141.2 million U.S. taxpayers you need gross adjusted income $480,930.
Then the stakes go up. To be part of the top 0.1% (141,205 taxpayers), your adjusted gross income needs to be $2.2 million. To reach the top 0.01% (14,120 taxpayers), you’ll need income of $11.9 million, and to hit the pinnacle of the 1,412 taxpayers in the top 0.001%, your income needs to be $59.4 million. And remember, those totals are based on 2015 tax returns the bar has certainly been raised since then.
According to IRS data, total adjusted gross income rose 4.5% year over year in 2015 to $10.14 trillion, and total income tax paid rose 5.8% to $1.45 trillion.
A place in the top 50% of taxpayers requires adjusted gross income of just $39,275, but the average income among that top 50% is $127,447. That reflects the truth of the old joke that if you and Bill Gates were in a room together, the average wealth would be something like $40 billion.
The top 50% of taxpayers paid 97.2% of all federal taxes in 2015. The top 1% paid 39%, more than a third of the amount paid by the top half. The top 0.001% paid 3.5% of all tax collected in 2015. Given the munificent tax breaks awarded to the very wealthy in the recently enacted tax law, that 39% is very likely to tumble.
But that will take a few more years to get hard data on. In the meantime, put your shoulder to the wheel, etc., etc., and take a look at the IRS data when you need more inspiration.
ALSO READ: States Where Americans Are Paying the Most Taxes