Economy articles
What do your federal taxes pay for?
The federal government’s biggest spending priorities in fiscal year 2025 were $1.6 trillion on Social Security, $1.3 trillion on national defense, and $875.4 billion on Medicaid and CHIP. How much of that came from your taxes? The Microsoft AI for Good Lab used budget data from the Office of Management and Budget (OMB) analyzed by USAFacts, to estimate how your tax dollars are allocated across $6.8 trillion in federal spending.Some things to note before you begin:We know taxes are complicated. This calculator estimates payroll and income taxes. It does not account for tax credits, itemized deductions, or other adjustments that affect individual tax bills.Federal spending is complicated too. (For a breakdown of how taxes are allocated, see the calculator’s methodology.)The calculator does not retain any personal information.Click the line items in the receipt for even more spending details.
How much do you pay in gas taxes?
US gas prices increased by $1.11 per gallon — about 37% — from March to April while the global economy responded the limited crude oil supply passing through the Strait of Hormuz. The average per-gallon price rose from $3.02 on March 2 to $4.12 on April 27, according to data from the Energy Information Administration (EIA). But prices vary broadly by state. Californians, who are paying $5.79 at the average station as of the latest data, may not feel much sympathy for their Texan counterparts, who pay $3.66 (even after an increase of over a dollar locally, as well). Gas prices in California haven’t been that low in over five years. So why the regional differences? The EIA says it’s everything from a region’s proximity to the supply to competition among local gas stations. Some factors — like supply disruptions — can be out of government’s (and even industry’s) control. But other factors are more directly in the hands of regional governments. Perhaps most directly: taxes. How do gas taxes work? A little over half of what you pay per gallon of gas covers the cost of the crude oil. Another 20% is refinery costs, and 11% is marketing and distribution. The remaining 18% is tax. When you fill up at the pump, your purchase is subject to multiple layers of taxation. The federal government imposes a flat tax on all gas purchases. Congress raised this to 18.4 cents per gallon in 1993 and it hasn’t changed since. Plus, every state government and Washington, DC, levy their own per-gallon gasoline excise taxes. On top of any volume-based taxes, most states have general sales taxes that add some percentage of all purchases, including gas. Finally, state legislation sometimes includes additional fees for storage, inspection, environmental cleanup, or other considerations.
Who doesn’t pay federal income taxes?
In 2023, 30.5% of tax filers paid no federal individual income tax. If deductions and credits reduce a filer’s taxable income to $0, they don’t have to pay federal income tax.
How has TCJA impacted individual income taxes?
The Tax Cuts and Jobs Act (TCJA), which took effect in 2018, changed individual income taxes: lowering tax rates, adjusting tax brackets, nearly doubling the standard deduction, and capping the state and local tax (SALT) deduction. It also made changes to federal corporate taxes. It was one of the biggest tax reform laws in recent years. Here’s how those changes have affected taxes, and which provisions have been made permanent or expanded by the passage of the One Big Beautiful Bill Act in July 2025.TCJA lowered effective tax rates across income groups When TCJA was passed in 2017, the average effective federal individual income tax rate — the percentage of their income most taxpayers pay in taxes — was 14.4%. In 2018, it dropped to 13.0%. By 2023, the average effective federal income tax rate had risen to 13.8%: a 0.8 percentage point increase from 2018, but still below the pre-TCJA rate of 14.4%. This uptick was probably a result of broad economic factors like income growth, employment shifts, and taxpayers moving into higher income brackets, rather than a result of TCJA.
US Federal Taxes: How the US Federal Government is Funded
The federal government collected $4.9 trillion in revenue in 2024, 99% of which came from taxes. How much does the average American pay? And who pays the most?
What does it cost the IRS to collect taxes?
The IRS spent $18.2 billion to collect $5.1 trillion in taxes in 2024. In other words, it cost the agency 36 cents for every $100 it collected. Collecting trillions of dollars from a population of 341 million people and approximately 35 million businesses is no small project. The IRS’s staff of 90,516 people collects and evaluates returns, issues refunds, offers taxpayer assistance, oversees tax-exempt organizations, and enforces tax law. How much money does the IRS collect? The IRS is responsible for collecting internal revenue — mostly in the form of taxes — from individuals and businesses across the US. In fiscal year 2024, the agency collected nearly $5.1 trillion, up 26.1% over the previous 10 years. That total included: $4.4 trillion from individual income taxes and other individual payroll contributions $565 billion from corporate income taxes $78 billion from excise taxes $48 billion from all othersThis revenue funds most of the federal government’s programs, from Social Security and Medicare to defense and support for veterans.
Who pays the most income tax?
The federal government generated $5.26 trillion in revenue in fiscal year 2025, half of which came from taxing people on their incomes. Individual income taxes in FY 2025 totaled $2.66 trillion, or $7,771 per person.
Which states have the highest and lowest income tax?
According to the most recent data, the average American paid $1,395 in state income taxes in 2023. Depending on which state you live in, you might be paying more, less, or nothing at all. What is state income tax? States collect state income taxes from residents annually. These are separate from federal income taxes, which are paid to the federal government. States commonly use income tax revenue to fund services and programs for: Education: supporting K–12 (teacher and administrator salaries) and higher education (state community colleges and universities) Healthcare: operating state-specific initiatives and state-administered programs such as Medicaid Corrections: building, maintaining, and operating state prison systems Transportation and infrastructure: building and maintaining roadways, bridges, airports, and public transit systemsPublic assistance: providing cash or benefits to individuals or families, including childcare services, transitional housing, and job training
How much revenue do states make from marijuana taxes?
Marijuana is the most commonly used federally illegal drug in the United States, with 48.2 million people, or about 18% of Americans, using it at least once in 2019. In states where the drug is legalized, however, cannabis taxes constitute a substantial source of funding for programs ranging from healthcare initiatives to law enforcement.How do states tax retail cannabis sales? The federal government recognizes cannabis as a Schedule 1 substance, meaning it’s considered highly addictive and therefore illegal at the federal level. Despite this, 23 states and Washington, DC, have fully legalized the drug, with an additional 21 states either fully or partially legalizing medical marijuana.Due to the lack of federal recognition over the legality of cannabis, state laws and regulations vary, meaning there’s no single model for revenue collection from medical or recreational dispensaries.As a result, tallying the total revenues generated from cannabis taxes nationwide isn’t currently feasible. However, several states keep consistent records on their taxation of both recreational and medical marijuana, which illustrate how they tax the drug and distribute the revenues.
How much money does the US federal government collect?
The federal government collected $5.26 trillion in fiscal year 2025. This is about $15,400 per person in the US, however individual contributions vary based on income, spending, and other factors. Government revenue is the total amount of money received from individual and corporate taxes, and other sources that are used to pay for government spending.
How much does the average American family pay in taxes?
One of the simplest ways to think about the US standard of living is to consider how much people earn in income, pay in taxes, and receive in government transfers. A government transfer can be cash, or non-cash in the form of services like Medicaid and Medicare.In 2021, the average American family in the middle 20% of income earners paid $17,902 in taxes to federal, state, and local governments. This includes direct taxes, such as income taxes, as well as indirect taxes, like payroll taxes. Of all the taxes the middle 20% paid in 2021, $10,391 went to federal income tax.
How do corporations avoid paying taxes?
In August 2022, President Joe Biden signed the Inflation Reduction Act into law. One of its provisions —a minimum 15% corporate tax — is designed to ensure corporations with $1 billion or more in average annual earnings pay taxes on profits even if they reduce their taxable income. The law took effect in 2023.A corporation’s taxable income is how much money a company makes in a year after subtracting any deductions.Income sources include:Sales revenueInvestment incomeRentCapital gainsDeductions can include:Any business expensesSalaries and wagesDepreciation valueAdvertising costsCharitable contributionsIn some cases, corporations find additional ways to reduce their taxable income. The methods include net operating losses, accelerated depreciation, tax credits, and profit shifting. The Inflation Reduction Act addresses these methods, but only partially.In 2016, the Government Accountability Office found that more than two-thirds of all active corporations had no federal income tax liability, including 42.3% of large corporations.Net operating lossesA corporation has a net operating loss when its business expenses and deductions are greater than its taxable income. Put simply, it’s when a company spends more than it makes. US tax law allows firms to carry over net operating losses from previous years to report lower taxable income for the current year.For example, if a corporation’s taxable income is -$3 million, not only would it not be liable for taxes in the current year, but a portion of that loss could also be carried over to the following year’s tax returns to reduce taxable income.Corporations are limited at carrying over 80% of their net operating losses. This is one of the main rules that allowed 19.5% of profitable businesses to pay no federal income tax in 2012.
'Sin taxes' by state: Where do people pay the most and least in alcohol and tobacco taxes?
Drinking and smoking are two more ways that Americans pay taxes.Every state and Washington, DC, has selective sales taxes on alcohol and tobacco. And like sales tax, alcohol and tobacco taxes are paid by people who buy those items.USAFacts looked at data from the Census Bureau and the Bureau of Economic Analysis to determine where people pay the most in tobacco and alcohol taxes, as a percentage of their per capita personal income in that state. (You can read our full report on Americans’ tax burdens here.)It's important to note that the numbers below are based not just on the excise or sales tax rates in that state, but also on the population size and how much is purchased per person. So, for example, tobacco excise taxes range from 17 cents per pack in Missouri, to $4.35 per pack in Connecticut and New York, according to 2022 CDC data. And alcohol taxes can be either excise taxes (based on volume of alcohol sold at the wholesale level) or sales taxes (on the retail price of alcohol).Where do people pay the most and least in alcohol tax?
Where do people pay the most and least in property taxes?
If you enjoy checking out books from the library, have a child that goes to public school, or feel confident relying on your local fire department or sewer system (among many other services), you are using services that are often partially funded by property taxes.Property taxes are levied on real property, such as homes, commercial buildings, and land, as well as personal property, which can include cars, bank accounts, and stocks and bonds. All states and Washington, DC, collect property taxes.The amount of property tax a person owes, or the property tax rate, depends on the property’s value. And in the US, property tax rates also vary by state, county, and municipality.Using data from the Census Bureau and the Bureau of Economic Analysis, USAFacts examined Americans’ property tax burdens — the proportion of their personal income paid in state and local property taxes. (See the full report on US tax burdens here.)
Improving the timeliness, accessibility, and usefulness of tax data
Each year, the Statistics of Income (SOI) Division of the Internal Revenue Service (IRS) publishes statistics on a range of tax topics, including tax rates, tax credits and deductions, corporate taxes, income, and more. By collecting over 160 million individual income tax returns each year in addition to corporate tax returns, W-2s for wage and salary workers, 1099s for self-employment income, 990s from nonprofits, and various other tax forms, the IRS sits on one of the richest sources of data in the United States. However, SOI’s data products are challenging to navigate and can be delayed multiple years. Additionally, SOI does not publish key data that the IRS collects.
What is the federal government's budget deficit?
The federal government’s fiscal year (FY) 2026 budget deficit is about $1 trillion as of February. A budget deficit occurs when the federal government spends more money than it brings in through taxes, customs duties, the sale of assets, and other revenues. When the government has a deficit, it borrows money by selling bonds and other securities in order to pay for it, adding to the national debt. A budget surplus, on the other hand, occurs when the government brings in more money than it spends.
How did the Inflation Reduction Act of 2022 change corporate taxes?
The Inflation Reduction Act, signed by President Joe Biden on Aug. 16, 2022, changed the way large corporations are taxed. The law imposed a minimum 15% tax on corporations that made $1 billion in average annual earnings over the past three years.Corporations report income in two different ways: book income and taxable income. The 15% minimum tax applies to book income with some adjustments.The minimum book tax's objective is to ensure that businesses pay taxes when making a profit. The tax took effect in 2023. The Joint Committee on Taxation estimated that about 150 corporations would be subject to the minimum tax each year, and that it will result in a gain of $222 billion over 10 years.A Congressional Research Service report estimated that about half the tax revenue would be collected from manufacturing companies (with about 16% from chemical manufacturing) and about 11% each from information and holding companies.
How do marijuana laws differ between states?
While marijuana remains illegal at the federal level per the 1970 Controlled Substances Act (CSA), the US has become a patchwork of state-determined laws pertaining to the drug. Some states have legalized recreational marijuana, others allow medicinal use and/or CBD oil. A few states have decriminalized the plant, and a handful follow the federal guidelines. What does marijuana legalization mean?In the United States, marijuana legalization refers to the process of making marijuana use, possession, and sales legal under certain conditions. Adults in states where the drug is legal can use it for both medical and recreational purposes, following state laws. Legalization allows for regulated sales of products that contain cannabidiol (CBD) and delta-9-tetrahydrocannabinol (THC). Medical cannabis laws also fall under this category, permitting patients with conditions such as chronic pain, multiple sclerosis, insomnia, and depression to use the substances for treatment. Since marijuana remains federally classified as an illegal drug, state legalization has many implications on federal income taxes filed by dispensaries, as well as the cross-border sale and transportation of cannabis products.
What is the average US tariff rate overall?
About 9.9% in January 2026. The average effective tariff rate shows how much the US collects in customs duties as a percentage of the total value of imported goods. However, imports may have different tariff rates (or none at all) depending on factors like country of origin, product type, trade agreements, and much more.
How much revenue does the federal government collect from tariffs?
$194.9 billion in FY 2025. This figure reflects revenue from tariffs and other import-related fees, also known as customs duties. Customs duties are taxes and fees paid by US importers and collected by US Customs and Border Protection on goods imported into the country, which generate revenue for the federal government.
What does the Department of the Treasury (TREAS) do?
The Department of the Treasury (Department of Treasury, TREAS) is a cabinet-level executive branch agency responsible for overseeing economic conditions and ensuring the financial security of the United States. The department's functions include advising the president on economic matters, managing federal finances, collecting taxes through the Internal Revenue Service, producing currency, and supervising national banks. It was established in 1789 and is the second-oldest department in the federal government.
Just the Facts about the US economy
How does the government measure the economy? By tracking GDP, unemployment numbers, and the prices people pay for goods and services.
How much does the US federal government spend?
About $7.04 trillion in fiscal year (FY) 2025. This averages about $20,600 per person in the US. The amount the government can spend depends on the amount of revenue it collects (e.g., through taxes, customs duties, and other sources). If it has to spend more revenue than it brings in, it borrows the funds, creating debt.
What does the Department of Transportation (DOT) do?
The Department of Transportation (USDOT, DOT) is a cabinet-level executive branch agency responsible for overseeing national transportation systems and infrastructure. Its functions include developing and implementing federal transportation policies; ensuring the safety and efficiency of highways, railroads, air travel, and maritime transport; and administering funding for transportation projects including local transit systems. It was established in 1966.
What are capital gains? How are they taxed?
Most Americans are taxed on the income they earn through work. Those taxes are based on how much someone earns, with higher tax rates charged to higher amounts of income.But taxes on investments aren’t handled the same way. The money someone makes from selling a house, a stock, or some other investment is called a capital gain. The tax rates for capital gains are different depending on how long the investment was owned, the amount of investment income received, and how much the taxpayer makes in annual income.Over the years, Congress has made several changes to how capital gains are taxed, from the tax rates themselves to what gets counted as a capital gain.What are capital gains?A capital gain or loss is the difference between the price paid for an asset and the price it was sold at. If you sell an asset for more than you paid for it, it becomes a capital gain. If the asset is sold for less than what was paid for it, then it is a capital loss. Assets can include homes, stocks, bonds, and other investments.A capital gain or loss is classified as short- or long-term. If someone sells an asset after owning it for a year or less, it is a short-term capital gain or loss. If the asset is sold after it’s been owned for more than a year, it is considered a long-term gain or loss.According to the Congressional Research Service, about two-thirds of individual capital gains subject to tax are from selling corporate stock; the remainder is from property sales.How are capital gains taxed?Capital gains are taxed depending on the net capital gain in a year. The Internal Revenue Service (IRS) defines net capital gain as the difference between a taxpayer’s total long-term capital gains and total short-term capital losses.
How much debt does the US have?
The US has $39.1T in debt as of March 2026. The federal government borrows money when its spending and investments cannot be funded by federal revenue alone; this debt enables the government to pay for programs and services when funds aren’t immediately available.
How much revenue does sports betting generate?
Betting isn't something that only happens at racetracks or casinos anymore – websites and apps are helping sports betting become a nationwide pastime. And as it grows in popularity, some state coffers are benefiting to the tune of millions in tax revenue from wagers on professional sports.What is sports betting?“Sports gambling” is defined in federal law as “a lottery, sweepstakes, or other betting, gambling, or wagering scheme based, directly or indirectly (through the use of geographical references or otherwise), on one or more competitive games in which amateur or professional athletes participate, or are intended to participate, or on one or more performances of such athletes in such games.” Basically: placing bets on the outcomes of sporting events or on the performance of particular athletes. Sports betting can happen in person (such as at a casino or sportsbook/off-track), online at websites like FanDuel, and through smartphone apps.Is sports betting legal?Sports betting is not federally prohibited in the United States; its legality depends on individual state laws. State-by-state legality was not always the case: sports betting was effectively banned nationwide in 1992 under the Professional and Amateur Sports Protection Act (PASPA). That law prohibited states from authorizing sports betting, although gambling was allowed to continue in four states that had state-authorized sports betting schemes in place pre-PASPA: Nevada, where all sports betting was already legal and regulated. Delaware, Oregon, and Montana, which were permitted to continue the limited forms of sports betting they already allowed — primarily state-run sports lotteries or parlay-style betting — but weren’t allowed to expand beyond those formats.
How much does it cost to own a car?
In 2023, the annual cost of owning a car was approximately $12,182 for 15,000 miles of driving. This total encompasses both fixed costs such as insurance, registration, taxes, depreciation, and finance charges, and variable costs such as fuel, maintenance, and tires.What are the costs of owning a car?Owning and operating a car involves both fixed and variable costs. Fixed costs, also known as ownership costs, do not change based on how much you drive and include insurance, license, registration, taxes, depreciation, and finance charges. Variable costs, also known as operating costs, involve the physical aspects of vehicle operation and include gasoline, maintenance, and tires.
US trading partners, imports and exports, and how tariffs factor in
In 2024, the US imported $4.1 trillion and exported $3.2 trillion in goods and services. Higher tariffs can raise prices and the impact on US jobs is a complex issue. Join Steve as he talks through US trade, tariffs and their impact, US trade partners, trade agreements, and more.
What causes high gas prices?
Drivers in the United States know that the price of gasoline is almost constantly changing. But what’s the cause of this unpredictability? The factors can be as local as the nearest gas station and as global as decisions made halfway around the world.What goes into gas prices?The retail price of gas depends on four factors: the cost of crude oil, refining costs and profits, distribution and marketing costs and profits, and taxes, according to the US Energy Information Administration (EIA). Of these, the price of crude oil is the single biggest contributor to the retail price of gasoline.
What are tariffs and how do they work?
What is a tariff?Tariffs, sometimes called duties or customs duties, are taxes on goods that are traded between nations. When goods cross the US border, Customs and Border Protection (CBP) collects tariffs based on the type of goods, their quantity, and which country they’re coming from.Why do countries use tariffs? Tariffs are a way for countries to control international trade. By artificially raising the cost of importing goods, tariffs can incentivize would-be importers to instead purchase goods from domestic sellers, potentially strengthening the local economy. Politics can also play a role: governments can adjust tariffs to exert economic leverage over political rivals or retaliate against other tariffs or economic sanctions. Tariffs also generate revenue for importing countries, though in developed countries and in today’s global economy, they tend to be used more to achieve foreign policy goals than financial ones.
How much money does the government collect per person?
The US collected $5.03 trillion in federal revenues in 2022, up $630 billion from the previous year, after adjusting for inflation.That equates to $15,098 collected per person, up 14% from 2021. Most revenues came from individual income tax, at $7,898 per person on average, and payroll taxes, at $4,510 per person on average.Using data from the State of the Union in Numbers, this chart visualizes how revenues have grown over the past two years.
How long do people wait for subsidized housing in the United States?
Two years and three months, on average, in 2024. That’s an 8% increase since 2023, when recipients spent two years and one month on waiting lists before moving in to subsidized housing.
Which states contribute the most and least to federal revenue?
In FY 2024, the federal government collected around $5.07 trillion from states and their residents through taxes on individuals and businesses and redistributed about $4.87 trillion back to states and residents through programs like Social Security, Medicaid, Medicare, food stamps, and education grants. The balance varies by state: Californians paid about $275.6 billion more to the federal government than they received, while Virginians received about $89.0 billion more than they paid.
How much debt does the average person in the US owe?
Around $63,300 as of the third quarter of 2025. Compared to the previous quarter (April through June 2025), the average adult owed $136 less after adjusting for inflation, reflecting slight shifts in household borrowing patterns. This debt, often referred to as “household debt,” represents the total amount owed by individuals for obligations such as mortgages, student loans, credit cards, and auto loans.
Where do people pay the most and least in sales tax?
The last time you picked up groceries or bought new clothes, you probably had to pay a sales tax. General sales taxes, which apply to most goods and services, are one of the biggest sources of tax revenue for state and local governments. These sales taxes made up 32.2% of state and local government tax revenue in 2020.To understand how these and other taxes impact Americans, USAFacts examined tax burdens across the country, looking at the proportion of a person’s income that is paid in taxes. Tax burdens can be measured in two ways: as a percentage of personal income, which is calculated by dividing the per capita tax revenue by the per capita annual income for each state, and as the per-person tax revenue.(There are also selective sales taxes, which target specific items like alcohol, tobacco, and gasoline. Learn more about how much Americans spend on alcohol and tobacco taxes here.)
The State and Local Tax (SALT) deduction cap: explained
When filing taxes, Americans can claim a standard deduction or itemize certain expenses to lessen their taxable income. The standard deduction is a fixed amount that differs depending on whether someone is filing as an individual or as a married couple. The Tax Cuts and Jobs Act of 2017 nearly doubled the standard deduction until the end of 2025.The act also capped the amount of state and local taxes that filers could use in itemized deductions at $10,000. The 117th Congress is currently debating whether this state and local tax deduction cap should be repealed or increased. Here’s how Americans are using this deduction.What is the State and Local Tax (SALT) deduction?This limit on state and local tax is often abbreviated to the SALT deduction cap and was temporarily set at $10,000 for single and married filers and $5,000 for married couples filing separately. Income taxes, sales taxes, personal property taxes, and certain real property taxes are eligible for the SALT deduction.
What is the “tampon tax”?
About a quarter of the US population are women in the 15 to 49 age group. And while not everyone in the group needs menstrual products, it’s an essential part of life for many.Menstrual products are an unavoidable cost for those who need them. So anything that makes menstrual products cost more can place an additional burden on those with lower incomes.Congress and some state governments took action to alleviate some of those costs in recent years.Starting in 2020, the federal government considers menstrual products as a qualified medical expense. And since 2016, twenty-three states exempted these products from state sales taxes, eliminating the so-called “tampon-tax." The “tampon tax” refers to sales tax applied to tampons, pads, and other menstrual products. Five other states have no sales tax at all, so the products are naturally exempt.
State tax revenue was down 4.4% in the first nine months of 2020
Like many businesses in the COVID-19 pandemic, states took a significant hit to incomes in 2020. In the second quarter of 2020 — or April through June — state tax collections dropped 29% compared to the same quarter in 2019. One reason for this is that many states, along with the federal government, shifted their income tax filing deadlines from spring to summer of 2020 — or from the second to third quarter — in response to the pandemic. But not all second quarter losses were due to the income tax delay: states also experienced declines in revenue from sources like sales and gas taxes as a result of social distancing and lockdowns.Data from the third quarter — July through September — shows state tax collections rebounded compared to the second quarter, in part because some states collected that delayed income tax revenue. But during the first three quarters of 2020 combined, total state tax revenue was still down 4.4% compared to the same period in 2019.
How did the child tax credit change over time?
The child tax credit is a tax break for families based on their income level and the number of dependent children they have. The American Rescue Plan Act of 2021 temporarily changed the child tax credit to make it more accessible for lower income families and increased the refund amount. That credit expansion expired at the end of December 2022.How does the child tax credit impact the middle class?Initially, the child tax credit provided the biggest benefits to upper- and middle-class families. Congress enacted the child tax credit in 1998 as a $500 per child non-refundable credit (meaning the credit could only decrease the amount of federal taxes a parent owed the IRS). Families eligible for more credit than they owed in federal taxes did not receive the remaining money.The credit grew to $1,000 per child in 2001. It also became partially refundable, giving parents access to a portion of the credit left over after paying federal taxes. The refund was equal to 15% of earned income over a certain amount up to the total tax credit available or the maximum refund value, whichever comes first.Before the 2017 Tax Cuts and Jobs Act (TCJA), the income refund threshold was $3,000 and the highest permitted refund was $1,000. The TCJA reduced the income threshold to $2,500 and the refund cap increased to $1,400. It also indexed the refund cap to inflation, meaning it would grow along with inflation over time.The TCJA also increased the credit per child from $1,000 to $2,000, though it eliminated the personal exemption, a separate tax program that reduced a family’s taxable income per household member. (The TCJA allowed an additional $500 credit per dependent 17 and older. The changes made under the TCJA are set to expire in 2025.)The credit per child gradually decreases for higher-income families. The TCJA increased the phase-out threshold from $75,000 to $200,000 for single parents and $110,000 to $400,000 for married couples.The American Rescue Plan child tax credit expansion expired at the end of December 2022. The credit is back to pre-pandemic levels: $2,000 for kids 17 and younger.Who benefited most from the child tax credit before the American Rescue Plan?The value American families received fluctuated by income and the number of qualifying children. People in lower income brackets owed less in federal taxes, meaning they had less opportunity to use the credit and received a smaller share of the leftover credit based on the refund formula. Meanwhile, the phase-out threshold for higher incomes ensured the wealthiest Americans received less credit per child.The result was a program primarily benefiting middle and upper middle-class families. These families received the largest child tax credits on average in 2019. Married couples in the top 20% to 40% tax bracket received an average payment of $3,951.The refund formula meant that the bottom 20% of the income earners received the least from the child tax credit. For single parents in this lowest bracket, the average child tax credit was $75. For married couples, that increased to $760. The bottom quintile of income earners had the lowest percentage of families that claimed the child tax credit at 3%.