One of the simplest ways to think about Americans’ economic standard of living is to consider how much people earn in income, pay in taxes, and receive from the government in the form of government transfers.
In 2018, the average American family in the middle 20% of income earners paid $15,748 in taxes to federal, state, and local governments. This includes direct taxes, such as income taxes, as well indirect taxes, like payroll taxes. In general, the average American family paid $2,392 in federal income tax in 2018.
Meanwhile, the same family in the middle 20% earned $51,666 on average from market sources, including from dividends and capital gains. To make it into the middle 20% of families in 2018, a family would have to earn between $35,989 and $69,486.
At the same time, the same family in the middle 20% received $19,031 in transfers from the government, including both cash transfers, such as supplemental security income, and non-cash transfers, such as Medicaid and Medicare.
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