US Tax Revenue — An Overview
The United States federal tax system is the financial backbone of the American government, generating the revenue necessary to fund national defense, infrastructure, social programs, healthcare, education, and interest on the national debt. In fiscal year 2025 (October 1, 2024 – September 30, 2025), the federal government collected $5.26 trillion in total revenue, representing a 3.6% increase from the prior fiscal year’s $5.08 trillion. This figure translates to roughly $15,400 per person in the United States, though individual tax contributions vary dramatically based on income, spending patterns, employment status, and other economic factors. The vast majority of this revenue — approximately 96% — flows through the Internal Revenue Service (IRS), which processed more than 266 million returns and forms in FY 2024 alone. For the first time in US history, the IRS surpassed the $5 trillion collection milestone in FY 2024, collecting $5.1 trillion in gross taxes, an increase of nearly 9% compared to the previous fiscal year.
The composition of federal tax revenue has remained relatively consistent for decades, with individual income taxes continuing to be the largest single source, accounting for 50.3% of total federal revenue in FY 2025. Payroll taxes — which fund Social Security, Medicare, and federal unemployment insurance — made up another 33.6% of collections. Corporate income taxes contributed approximately 11%, while the remaining revenue came from customs duties (tariffs), estate and gift taxes, excise taxes, and miscellaneous fees. At the state and local level, property taxes dominate, generating $797 billion in 2024 and representing 38% of all state and local tax revenue. Combined state and local tax collections reached $2.095 trillion in 2024, up 4.6% from the prior year. Understanding the scale, sources, and trends in US tax revenue in 2026 is essential for policymakers, economists, businesses, and citizens alike, as these figures directly shape the nation’s fiscal health, deficit trajectory, and capacity to meet both current obligations and future challenges.
Key Interesting Facts — US Tax Revenue 2026
| # | Key Fact | Statistic / Data Point |
|---|---|---|
| 1 | Total federal revenue collected (FY 2025) | $5.26 trillion — $15,400 per person in the US |
| 2 | Federal revenue increase FY 2024 → FY 2025 | +3.6% — up from $5.08 trillion in FY 2024 |
| 3 | IRS gross tax collections (FY 2024) | $5.1 trillion — first time exceeding $5 trillion; +9% year-over-year |
| 4 | Individual income taxes (FY 2025) | 50.3% of total federal revenue — largest single source |
| 5 | Payroll taxes (Social Security + Medicare, FY 2025) | 33.6% of total federal revenue — $1.77 trillion collected (FY 2024) |
| 6 | Corporate income taxes (FY 2024) | ~11% of federal revenue — $420 billion in FY 2023; declined from 23% in 1960 |
| 7 | Returns and forms processed by IRS (FY 2024) | 266.6 million — 93.3% of individual returns filed electronically |
| 8 | Refunds issued by IRS (FY 2024) | 117.6 million refunds totaling $461.2 billion |
| 9 | State & local tax revenue (2024) | $2.095 trillion total — up 4.6% from 2023 |
| 10 | Property tax collections — state & local (2024) | $797 billion — 38% of all state/local revenue; +8.2% year-over-year |
| 11 | Tax gap — unpaid taxes owed (TY 2022 projection) | $696 billion gross / ~$611 billion net — 15% of taxes owed go unpaid annually |
| 12 | Voluntary compliance rate (VCR, TY 2022) | 85.0% — meaning 15% of taxes are not paid voluntarily and timely |
| 13 | IRS audits closed (FY 2024) | 505,514 audits resulting in $29 billion in recommended additional tax |
| 14 | IRS enforcement collections (FY 2024) | $77.6 billion recovered from unpaid taxes — +13.6% from prior year |
| 15 | Top 1% share of income taxes paid (2022 data) | ~42% of all individual income taxes — effective rate of 24.2% |
Sources: USAFacts FY 2025 Revenue Data (November 2024); IRS Data Book FY 2024 (Publication 55B, May 2025); Congressional Budget Office Monthly Budget Review April 2025; IRS Tax Gap Projections TY 2022 (Publication 5869, January 2026); US Census Bureau Quarterly Summary of State & Local Tax Revenue 2024 (February 2025); Congressional Research Service “Overview of Federal Tax System 2024” (R48313).
The sheer scale of US tax collections in 2026 underscores the complexity and reach of the American tax system. The fact that $5.26 trillion in federal revenue was collected in FY 2025 — a figure larger than the entire gross domestic product of all but a handful of countries — demonstrates the extraordinary fiscal capacity of the United States. Yet equally striking is what is not collected: the tax gap for tax year 2022 is projected at $696 billion, meaning that for every $100 owed in federal taxes, roughly $15 goes unpaid. The voluntary compliance rate of 85% has remained relatively stable for decades, but the absolute dollar value of uncollected revenue continues to grow in proportion to the economy. The IRS’s enforcement efforts, bolstered by funding from the Inflation Reduction Act, have begun to narrow this gap — recovering $77.6 billion in FY 2024 through audits, payment agreements, and collection actions — but the vast majority of the tax gap persists.
Perhaps most telling is the distribution of the tax burden: the top 1% of earners pay approximately 42% of all individual income taxes, despite earning roughly 22% of total income (based on 2022 IRS data). This reflects the highly progressive nature of the US federal income tax system, where higher earners face marginal rates up to 37% and effective rates that far exceed those of middle- and low-income taxpayers. At the same time, corporate income taxes have declined as a share of federal revenue — falling from 23% in 1960 to just 11% today — due in part to the shift toward pass-through business structures and statutory rate reductions. At the state and local level, the picture is different: property taxes are by far the dominant source, generating $797 billion in 2024 alone, an increase of 8.2% driven by rapid home price appreciation. The interplay between federal, state, and local tax systems creates a fiscal landscape of immense scale and complexity, one that collected over $7.3 trillion combined in 2024-2025 — roughly 27% of US GDP.
Federal Tax Revenue by Source in the US 2026
| Revenue Source | FY 2024 / FY 2025 Amount | % of Total Federal Revenue | Notes / Details |
|---|---|---|---|
| Individual Income Taxes | $2.66 trillion (FY 2024) / 50.3% (FY 2025) | ~50% — largest source | Includes withheld taxes + estimated payments + final settlements |
| Payroll Taxes (Social Security + Medicare) | $1.77 trillion (FY 2024) / 33.6% (FY 2025) | ~34% | Social Security: 12.4% on first $176,100 (2025); Medicare: 2.9% uncapped |
| Corporate Income Taxes | $420 billion (FY 2023) | ~11% | Taxed at flat 21% rate (since TCJA 2017); down from 35% pre-2017 |
| Customs Duties (Tariffs) | $14 billion increase (FY 2025 YTD) | Growing — +32% through April 2025 | Increased significantly due to 2025 tariff expansions |
| Estate & Gift Taxes | $32 billion (FY 2024) | <1% | Applies to estates >$13.99M (2025 threshold) |
| Excise Taxes | +$9 billion (FY 2025 vs FY 2024) | ~2% | Gasoline, tobacco, alcohol, airline tickets, etc. |
| Miscellaneous Fees & Fines | +$3 billion (FY 2025 vs FY 2024) | <1% | National park fees, agency payments, licenses, etc. |
| Total Federal Revenue | $5.08 trillion (FY 2024) / $5.26 trillion (FY 2025) | 100% | Represents ~19% of GDP in recent years |
Sources: Congressional Budget Office Monthly Budget Review April 2025 (www.cbo.gov/publication/61301); USAFacts Federal Revenue Data FY 2024-2025; IRS Data Book FY 2024; Bipartisan Policy Center “What Kinds of Revenue Does the Government Collect?” (September 2025); Congressional Research Service R48313 (Overview of Federal Tax System 2024).
Individual income taxes remain the undisputed heavyweight of the US federal revenue system, consistently generating approximately half of all federal revenue each year. In FY 2024, this amounted to $2.66 trillion, with collections in FY 2025 tracking toward similar or slightly higher totals. The vast majority of individual income tax revenue is collected through withholding from employees’ paychecks, which accounted for an estimated $153 billion increase in FY 2025 alone — a 9% year-over-year rise driven primarily by wage growth of approximately 5% in the first three quarters of 2025. This withholding system ensures that the federal government collects revenue continuously throughout the year, rather than waiting for annual tax filing deadlines. Smaller amounts come from estimated quarterly payments (made by self-employed individuals, gig workers, and those with investment income) and final tax settlements filed each April.
Payroll taxes, the second-largest source, brought in $1.77 trillion in FY 2024 and are projected to represent 33.6% of total revenue in FY 2025. Unlike individual income taxes, payroll taxes are regressive in structure — the Social Security tax applies a 12.4% rate (split evenly between employer and employee) only on the first $176,100 of wages (as of 2025), meaning any earnings above that threshold are exempt from this tax. The Medicare tax, by contrast, has no income cap and applies a 2.9% rate on all wages, with an additional 0.9% surcharge on high earners above $200,000. Corporate income taxes — once a far more significant revenue source — have declined steadily as a share of total revenue, falling from 23% in 1960 to just 11% today. This decline is attributable to both rate reductions (from 35% pre-2017 to a flat 21% under the Tax Cuts and Jobs Act) and the rise of pass-through entities (S corporations, partnerships, LLCs), which pay taxes through their owners’ individual returns rather than at the corporate level.
State & Local Tax Revenue in the US 2024-2026
| Tax Type | 2024 Collections | % of State/Local Revenue | Year-over-Year Change |
|---|---|---|---|
| Property Taxes | $797.0 billion | 38.0% | +8.2% (highest growth rate) |
| General Sales Taxes | $587.0 billion | 28.0% | +1.2% |
| Individual Income Taxes | $537.4 billion | 25.6% | +4.7% |
| Corporate Income Taxes | $174.5 billion | 8.3% | +0.2% |
| Total State & Local Tax Revenue | $2.095 trillion | 100% | +4.6% from $2.004T in 2023 |
Sources: US Census Bureau Quarterly Summary of State & Local Tax Revenue 2024 (February 2025); NAHB analysis of Census data; Eye on Housing “Property Tax Revenue Outpaces Other Sources in 2024” (March 2025); Tax Foundation “State & Local Tax Collections Per Capita by State 2025”.
At the state and local level, property taxes reign supreme, generating $797 billion in 2024 — an increase of 8.2% from the prior year and the fastest growth rate of any major tax category. This sharp year-over-year increase was driven primarily by rapid home price inflation in 2023 and 2024, which directly feeds into property tax assessments with a lag. Property taxes now account for 38% of all state and local tax revenue, with virtually all of this collected at the local government level — counties, cities, school districts, and special districts. In fact, property taxes make up 70.2% of all local government revenue, making them the single most important fiscal tool for funding public schools, police and fire departments, libraries, and municipal services. Seventeen states collected zero property tax revenue at the state level in 2024, meaning all property tax collections in those states remain with local governments.
General sales taxes, the second-largest state and local revenue source, generated $587 billion in 2024, representing 28% of total collections. Sales tax revenue growth was modest at +1.2% year-over-year, reflecting relatively stable consumer spending patterns. At the state level, sales taxes and individual income taxes are roughly equal in importance: $470 billion came from sales taxes (31.5% of state revenue) versus $490.7 billion from individual income taxes (32.9% of state revenue) in 2024. Individual income taxes at the state and local level totaled $537.4 billion, up 4.7% from the prior year. This category is highly variable by state, as nine states — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming — do not levy a broad-based individual income tax. The average per capita state and local tax burden was $7,109 in FY 2022 (the most recent comprehensive data), but this figure varies dramatically by state. New York residents faced the highest combined burden at $12,685 per capita, followed by California ($10,319) and Connecticut ($9,718), while residents of Alabama ($4,722), Tennessee ($4,731), and Mississippi ($4,767) experienced the lowest per-capita tax burdens.
Tax Gap & IRS Enforcement in the US 2026
| Indicator | Tax Year 2022 Projection / FY 2024 Data | Details / Notes |
|---|---|---|
| Gross Tax Gap (TY 2022) | $696 billion | Amount of taxes owed but not paid voluntarily and timely |
| Net Tax Gap (TY 2022) | ~$611 billion (estimated) | Gross gap minus late payments and enforcement recoveries |
| Voluntary Compliance Rate (VCR, TY 2022) | 85.0% | Share of taxes paid voluntarily and on time |
| Net Compliance Rate (NCR, TY 2022) | ~87% (projected) | Share of taxes ultimately collected after enforcement |
| Tax Gap — Underreporting | $539 billion (77% of gross gap) | Taxes understated on timely filed returns |
| Tax Gap — Underpayment | $94 billion (14% of gross gap) | Taxes reported but not paid on time |
| Tax Gap — Nonfiling | $63 billion (9% of gross gap) | Taxes not paid by those who don’t file on time |
| IRS enforcement collections (FY 2024) | $77.6 billion | Recovered through audits, liens, levies, payment plans; +13.6% YoY |
| IRS audits closed (FY 2024) | 505,514 audits | Resulted in $29 billion in recommended additional tax |
| Installment agreement collections (FY 2024) | $16 billion | Up 12% year-over-year — growing use of payment plans |
| IRS collected from high-net-worth taxpayers (FY 2024) | $1.1 billion from 1,600 wealthy individuals | Up from just $38 million prior year (Inflation Reduction Act funding) |
Sources: IRS Tax Gap Projections for TY 2022 (Publication 5869, January 2026); IRS Data Book FY 2024 (Publication 55B, May 2025); Committee for Responsible Federal Budget “Primer: Understanding the Tax Gap” (March 2025); Clemson University / The Conversation “New IRS Funding Boosted Tax Enforcement” (November 2025); IRS Taxpayer Compliance Research (www.irs.gov/statistics/irs-taxpayer-compliance-research).
The tax gap — the difference between taxes owed and taxes actually collected — represents one of the most significant fiscal challenges facing the United States. For tax year 2022, the IRS projects a gross tax gap of $696 billion, meaning that roughly $700 billion in legally owed federal taxes go unpaid each year. This figure has grown steadily over time, rising from an average of $441 billion annually for tax years 2011-2013 to $496 billion for tax years 2014-2016, and now to $696 billion for 2022. The voluntary compliance rate (VCR) — the percentage of taxes paid voluntarily and on time — stands at 85.0% for TY 2022, roughly in line with historical averages. After accounting for late payments and IRS enforcement efforts, the net compliance rate (NCR) reaches approximately 87%, meaning that even with enforcement, 13% of all taxes owed — over $600 billion — are never collected.
The composition of the tax gap reveals where noncompliance is concentrated. Underreporting accounts for $539 billion, or 77% of the gross tax gap — this is tax that is understated on returns that are filed on time, typically due to unreported income, overstated deductions, or inflated credits. The vast majority of underreporting occurs in income categories with no withholding and little third-party reporting — such as self-employment income, rental income, royalties, and cash-based businesses. In contrast, income subject to withholding (like wages) and third-party reporting (like interest and dividends) shows compliance rates exceeding 95%. Underpayment — taxes that are correctly reported but not paid on time — contributes another $94 billion (14%), while nonfiling — failure to file required returns altogether — accounts for $63 billion (9%).
The IRS’s enforcement efforts, significantly bolstered by $80 billion in new funding from the Inflation Reduction Act (later reduced to $60 billion), have begun to make a measurable dent in the tax gap. In FY 2024, the IRS collected $77.6 billion in unpaid taxes through enforcement actions, a 13.6% increase from the prior year. Notably, the agency recovered $1.1 billion from just 1,600 high-net-worth individuals with known but unpaid tax debts — a dramatic increase from $38 million the prior year. The IRS closed 505,514 audits in FY 2024, resulting in $29 billion in recommended additional tax assessments. Importantly, $16 billion of total enforcement collections came from installment agreements (payment plans), which allow taxpayers to settle debts over time without facing liens or levies. The cost-effectiveness of enforcement is striking: the IRS spends just 34 cents for every $100 collected through audits.
Top Income Earners & Tax Burden Distribution in the US 2026
| Income Group | Share of Total Income | Share of Income Taxes Paid | Average Effective Tax Rate |
|---|---|---|---|
| Top 1% (AGI >~$600,000) | ~22% of total income | ~42% of all income taxes | 24.2% effective rate |
| Top 5% (AGI >~$250,000) | ~40% of total income | ~65% of all income taxes | ~22% effective rate |
| Top 10% (AGI >~$170,000) | ~50% of total income | ~75% of all income taxes | ~20% effective rate |
| Top 25% (AGI >~$100,000) | ~70% of total income | ~90% of all income taxes | ~17% effective rate |
| Top 50% (AGI >~$50,000) | ~90% of total income | ~98% of all income taxes | ~15% effective rate |
| Bottom 50% (AGI <~$50,000) | ~10% of total income | ~2% of all income taxes | 3.3% effective rate |
| Average All Taxpayers | 100% | 100% | 14.9% effective rate |
Sources: Tax Foundation Analysis of IRS Statistics of Income Data 2025; Congressional Budget Office FY 2025 Revenue Estimates; IRS Data Book FY 2024; Tax Policy Center; “US Tax Statistics 2026” comprehensive data (levyio.com, March 2026 update); CRS R48313 “Overview of Federal Tax System 2024”.
The distribution of the federal income tax burden in the United States is among the most progressive in the developed world. The top 1% of earners — those with adjusted gross income (AGI) above approximately $600,000 — pay 42% of all federal individual income taxes, despite earning roughly 22% of total income. This group faces an average effective federal income tax rate of 24.2%, far exceeding the national average of 14.9%. As you move further up the income distribution, the concentration intensifies: the top 5% of earners pay 65% of all income taxes, the top 10% pay 75%, and the top 25% pay approximately 90%. Conversely, the bottom 50% of earners — those with AGI below roughly $50,000 — collectively pay just 2% of all federal income taxes and face an average effective rate of only 3.3%.
This progressive structure is the result of several features of the US tax code: marginal tax rates that rise with income (from 10% on the first dollars earned up to 37% on income above $609,350 for single filers in 2026), the standard deduction (which shields the first $15,000 of income from tax for single filers in 2026), and refundable tax credits like the Earned Income Tax Credit (EITC) and Child Tax Credit, which can result in negative effective tax rates for low-income families. The effective tax rate — calculated as total income tax paid divided by AGI — provides a more accurate picture of actual tax burden than marginal rates alone. While the top marginal rate is 37%, even the wealthiest taxpayers typically pay effective rates in the low-to-mid 20% range due to deductions, credits, and the fact that lower tax brackets apply to the first portions of their income.
It’s critical to note that these figures reflect federal income taxes only and do not include payroll taxes (Social Security and Medicare), which are regressive and hit middle- and lower-income workers hardest. When payroll taxes are factored in, the overall federal tax burden becomes less progressive. For instance, a worker earning $50,000 pays 7.65% in employee-side payroll taxes on every dollar earned, while a worker earning $500,000 pays that same 7.65% on only the first $176,100 (the 2025 Social Security wage base), resulting in a much lower overall payroll tax rate as a percentage of total income. State and local taxes further complicate the picture, as sales taxes and property taxes tend to take a larger share of income from lower earners.
IRS Operations & Filing Statistics in the US 2026
| Indicator | FY 2024 Data | Notes / Details |
|---|---|---|
| Total returns & forms processed | 266.6 million | Includes individual, business, tax-exempt, and other forms |
| Individual income tax returns filed | ~163 million (estimated) | 93.3% filed electronically |
| Electronic filing rate (all returns) | 82.5% | 219.9 million returns filed electronically |
| Taxpayer assistance interactions | 62.2 million | Phone calls, in-person visits, online assistance; +3.2% YoY |
| IRS.gov visits | 690 million | 1.7 billion page views |
| “Where’s My Refund?” inquiries | 382.8 million | +26% from prior year |
| Transcript requests | Part of 2 billion e-transactions | Online taxpayer assistance transactions up 47% YoY |
| Refunds issued — total number | 117.6 million | Totaling $461.2 billion in value |
| Average refund amount | ~$3,920 | Calculated from $461.2B / 117.6M refunds |
| Refunds with EITC (Earned Income Tax Credit) | 21.4 million | Refundable credit for low-to-moderate income workers |
| Refunds with Child Tax Credit | 14.3 million | Refundable credit for families with children |
Sources: IRS Data Book FY 2024 (Publication 55B, May 2025); IRS “Returns Filed, Taxes Collected, and Refunds Issued”; IRS Press Release IR-2025-63 (May 29, 2025).
The operational scale of the Internal Revenue Service is staggering. In fiscal year 2024, the IRS processed 266.6 million tax returns and forms, ranging from individual income tax returns (Form 1040) to corporate returns, partnership returns, estate tax returns, and information returns (W-2s, 1099s, etc.). Of the total filings, 219.9 million — or 82.5% — were submitted electronically, reflecting a multi-decade shift away from paper filing. Among individual income tax returns specifically, the electronic filing rate reached 93.3%, with only a small fraction of taxpayers still mailing in paper returns. The IRS issued 117.6 million refunds in FY 2024, totaling $461.2 billion, for an average refund of approximately $3,920 per taxpayer. More than 21.4 million refunds included the Earned Income Tax Credit (EITC), and 14.3 million included the Child Tax Credit, both of which are refundable credits that can result in tax refunds even for those with little or no income tax liability.
Taxpayer services saw significant improvements in FY 2024, with the IRS assisting taxpayers on 62.2 million occasions — a 3.2% increase from the prior fiscal year. The agency reduced call wait times and improved its “level of service” metric, which measures the percentage of callers who reach a live representative. The IRS’s digital services saw explosive growth: IRS.gov received approximately 690 million visits with 1.7 billion page views, while taxpayers made more than 382.8 million inquiries on the popular “Where’s My Refund?” tool, a 26% increase from the prior year. Overall, the agency handled more than 2 billion electronic taxpayer assistance transactions in FY 2024, up 47% from the previous year. This digital shift reflects both taxpayer preference and the IRS’s strategic investments in modernizing its technology infrastructure, which had long been criticized as outdated and inefficient.
Corporate Income Tax Trends in the US 2024-2026
| Year / Period | Corporate Tax Collections | % of Federal Revenue | Statutory Rate |
|---|---|---|---|
| FY 2023 | $420 billion | 9% | 21% (flat rate since 2018) |
| FY 1960 | ~$21 billion (inflation-adjusted) | 23% | 52% (top marginal rate at the time) |
| FY 2000 | ~$207 billion | 10% | 35% |
| Pre-TCJA (2017) | ~$297 billion | ~9% | 35% |
| Post-TCJA (2018 onward) | $420 billion (FY 2023) | ~9-11% | 21% (permanently reduced by TCJA) |
| TY 2024 (projected) | Declining slightly | ~9-10% | 21% |
Sources: Congressional Budget Office; Bipartisan Policy Center “What Kinds of Revenue Does the Government Collect?” (September 2025); IRS Statistics of Income; Statista Corporate Income Tax Data; CRS R48313 “Overview of Federal Tax System 2024”.
Corporate income tax revenue has undergone a dramatic transformation over the past six decades. In 1960, corporate taxes accounted for 23% of all federal revenue, making them the second-largest revenue source after individual income taxes. By FY 2023, that share had fallen to just 9%, despite absolute dollar collections reaching $420 billion. This decline is attributable to several factors. First, the statutory corporate tax rate has been reduced repeatedly — from a top rate of 52% in the 1950s-1960s, to 35% in the 1980s-2017, to a flat 21% under the Tax Cuts and Jobs Act (TCJA) enacted in December 2017. The 21% rate is permanent under current law, unlike many of the individual tax provisions in the TCJA, which are set to expire after 2025 unless extended by Congress.
Second, a growing share of American businesses have reorganized as pass-through entities — S corporations, partnerships, and limited liability companies (LLCs) — rather than traditional C corporations. Pass-through entities do not pay corporate income tax; instead, their profits “pass through” to the owners’ individual tax returns and are taxed at individual income tax rates. This shift has been driven by both tax advantages and regulatory flexibility. According to IRS data, approximately 2.4 million C corporations were operating in the US as of FY 2023, but the total number of business entities — including pass-throughs — is far higher. The result is that a substantial and growing portion of business income is now taxed through the individual income tax system rather than the corporate system, contributing to the decline in corporate tax revenue as a share of total collections.
Third, globalization and tax planning have allowed multinational corporations to shift profits to lower-tax jurisdictions, reducing their US tax liability. While the TCJA included measures aimed at curbing profit-shifting (such as the GILTI and BEAT provisions), corporate tax avoidance remains a significant issue. Despite these trends, corporate tax collections in absolute dollar terms have remained relatively stable in recent years, hovering in the $400-$450 billion range annually.
Economic Impact & Revenue as % of GDP in the US 2026
| Fiscal Year | Federal Revenue | Federal Revenue as % of GDP | US GDP (estimated) |
|---|---|---|---|
| FY 2024 | $5.08 trillion | ~17-18% of GDP | ~$28-29 trillion |
| FY 2025 | $5.26 trillion | ~18-19% of GDP | ~$29-30 trillion (projected) |
| 50-year historical average | Varies widely | ~17.4% | N/A |
| FY 2023 | $4.9 trillion | ~17% | ~$27 trillion |
Sources: Congressional Budget Office; US Bureau of Economic Analysis (BEA); Federal Reserve Economic Data (FRED); USAFacts; Treasury Fiscal Data.
Comparing federal revenue to GDP provides critical context for understanding the size of government relative to the overall economy. In FY 2024, federal revenue equaled approximately 17% of GDP, a figure that has remained relatively stable over the long term, fluctuating in a range between 15% and 20% depending on economic conditions and tax policy changes. The 50-year historical average for federal revenue as a percentage of GDP is approximately 17.4%, meaning current revenue levels are roughly in line with historical norms. However, this ratio can shift significantly during recessions (when revenue falls due to declining incomes and profits) and booms (when revenue surges due to rising incomes, capital gains, and corporate profits).
State and local revenues add another layer. Combined state and local tax revenue of $2.095 trillion in 2024 represents an additional 7-8% of GDP, bringing total government revenue (federal + state + local) to approximately 25-26% of GDP — still below the OECD average for developed countries, many of which collect 30-40% of GDP in total tax revenue. The United States relies more heavily on income taxes (both individual and corporate) than many peer nations, which tend to rely more on value-added taxes (VAT) — a form of consumption tax not used at the federal level in the US.
Deficit & Debt Context — US Tax Revenue 2025-2026
| Fiscal Year | Federal Revenue | Federal Spending | Deficit / Surplus |
|---|---|---|---|
| FY 2025 | $5.26 trillion | $7.07 trillion (projected) | -$1.8 trillion deficit (CBO estimate) |
| FY 2024 | $5.08 trillion | $6.75 trillion | -$1.67 trillion deficit (actual) |
| FY 2023 | $4.9 trillion | $6.13 trillion | -$1.7 trillion deficit |
| National Debt (Feb 2026) | N/A | N/A | >$36 trillion total federal debt |
Sources: Congressional Budget Office “Fiscal 2025 Deficit Was $1.8 Trillion” (November 2025); CBO Monthly Budget Reviews; US Treasury Fiscal Data; Federal Reserve Economic Data.
Despite collecting $5.26 trillion in revenue in FY 2025, the federal government ran a deficit of $1.8 trillion, meaning it spent $1.8 trillion more than it collected. This deficit — equivalent to roughly 6% of GDP — was financed by borrowing, adding to the national debt, which has surpassed $36 trillion as of early 2026. The deficit in FY 2025 was 2% smaller than the FY 2024 deficit of $1.83 trillion, thanks to revenue growth of 6% outpacing spending growth of 4%. However, the deficit remains historically elevated outside of wartime and major economic crises.
The primary drivers of federal spending are mandatory programs (Social Security, Medicare, Medicaid), which grow automatically with demographics and healthcare costs, and net interest on the public debt, which surpassed $1 trillion for the first time in FY 2025. As the debt grows and interest rates remain elevated, interest payments consume an increasing share of the budget, crowding out other priorities. Revenue increases alone will not close the deficit — significant spending reforms or tax increases (or both) would be required to bring the budget into balance. The gap between revenue and spending underscores the fiscal challenges facing the United States in the coming decades, particularly as the baby boomer generation continues to retire and draw on Social Security and Medicare benefits.
State-Specific Tax Burdens & Revenue Variation in the US 2026
| State | Per Capita State & Local Tax Burden (FY 2022) | Tax Structure Notes |
|---|---|---|
| New York | $12,685 — highest in nation | High income, sales, and property taxes |
| California | $10,319 | Progressive income tax; high property values |
| Connecticut | $9,718 | Wealthy population; progressive income tax |
| District of Columbia | $16,000+ (statistical outlier) | Federal property tax burden included |
| Alabama | $4,722 — among lowest | No income tax on most residents; low property tax |
| Tennessee | $4,731 — among lowest | No income tax; relies heavily on sales tax (9.55% combined avg) |
| Mississippi | $4,767 — among lowest | Low income and property taxes |
| Florida | $4,914 | No income tax; relies on sales and property taxes |
Sources: Tax Foundation “State & Local Tax Collections Per Capita by State 2025” (July 2025); US Census Bureau Annual Survey of State Government Finances; Tax Foundation State Tax Competitiveness Index 2025.
The variation in state and local tax burdens across the United States is enormous. New York residents face the highest combined state and local per capita tax burden at $12,685, more than 2.5 times higher than residents of Alabama ($4,722), Tennessee ($4,731), or Mississippi ($4,767). This variation reflects differences in tax policy choices, economic composition, cost of living, and public service levels. States with no income tax — such as Florida, Texas, Tennessee, Washington, and Nevada — tend to rely more heavily on sales taxes and property taxes to fund government services. For example, Tennessee has a combined average state and local sales tax rate of 9.55%, one of the highest in the nation, to compensate for the absence of a broad-based income tax.
Conversely, states like California and New York impose high progressive income taxes (with top rates of 13.3% and 10.9%, respectively) alongside substantial property and sales taxes. Connecticut and Hawaii, both with high per-capita burdens, combine wealthy populations, progressive income tax structures, and elevated property values. Alaska and North Dakota are statistical outliers due to severance taxes on oil and mineral extraction, which generate substantial revenue without heavily taxing residents’ income or consumption. The choice of tax structure has significant economic implications: states with no income tax often attract high-earning individuals and businesses, while states with high taxes may struggle with out-migration but can fund more generous public services and infrastructure.
Tax Brackets & Rates for 2026 Tax Year
| Filing Status: Single | Taxable Income Range | Marginal Tax Rate |
|---|---|---|
| $0 – $11,925 | First $11,925 | 10% |
| $11,926 – $48,475 | Next $36,550 | 12% |
| $48,476 – $103,350 | Next $54,875 | 22% |
| $103,351 – $197,300 | Next $93,950 | 24% |
| $197,301 – $250,525 | Next $53,225 | 32% |
| $250,526 – $626,350 | Next $375,825 | 35% |
| $626,351+ | All income above $626,350 | 37% |
Source: IRS Revenue Procedure 2025-28 (inflation-adjusted brackets for tax year 2026); Tax Foundation; levyio.com US Tax Statistics 2026.
The federal income tax system uses a progressive marginal rate structure with seven tax brackets ranging from 10% to 37%. For tax year 2026 (filed in early 2027), a single filer pays 10% on the first $11,925 of taxable income, 12% on income between $11,926 and $48,475, and so on up the scale. The top marginal rate of 37% applies only to taxable income above $626,350 for single filers. It’s critical to understand that these are marginal rates — only the income within each bracket is taxed at that rate, not all income. For example, a single filer with $100,000 in taxable income does not pay 22% on the entire $100,000; instead, they pay 10% on the first $11,925, 12% on the next $36,550, and 22% on the remaining income up to $100,000.
The standard deduction for tax year 2026 is $15,000 for single filers and $30,000 for married couples filing jointly (adjusted annually for inflation). This deduction reduces taxable income dollar-for-dollar, effectively shielding the first $15,000/$30,000 from tax. For instance, a single person earning $50,000 in gross income can subtract the $15,000 standard deduction, resulting in $35,000 of taxable income. Following the Tax Cuts and Jobs Act (TCJA) of 2017, which nearly doubled the standard deduction and capped many itemized deductions, only about 10% of taxpayers now itemize deductions (down from 31% in 2017). The vast majority take the standard deduction, simplifying their tax filing considerably.
These individual tax brackets and the standard deduction are set to expire after tax year 2025 under current law, reverting to the pre-TCJA structure unless Congress acts to extend them. This creates significant uncertainty for tax planning and federal revenue projections beyond 2025.
Disclaimer: The data research report we present here is based on information found from various sources. We are not liable for any financial loss, errors, or damages of any kind that may result from the use of the information herein. We acknowledge that though we try to report accurately, we cannot verify the absolute facts of everything that has been represented.
