|
|
|
2018 |
|
|
2017 |
|
|
Changes 2 |
||||||||||||||||||||||||||||||
|
(In billions, except percentages) |
|
Total |
|
Federal |
|
State and Local 1 |
|
|
Total |
|
Federal |
|
State and Local 1 |
|
|
Total |
|
Federal |
|
State and Local 1 |
|
Total |
|
Federal |
|
State and Local 1 |
||||||||||||
|
Individual income taxes |
|
$ |
2,109 |
|
$ |
1,683 |
|
$ |
426 |
|
|
$ |
1,972 |
|
$ |
1,587 |
|
$ |
385 |
|
|
$ |
137 |
|
$ |
96 |
|
$ |
41 |
|
|
7% |
|
|
6% |
|
|
11% |
|
Payroll taxes |
|
|
1,189 |
|
|
1,189 |
|
|
— |
|
|
|
1,180 |
|
|
1,180 |
|
|
— |
|
|
|
9 |
|
|
9 |
|
|
— |
|
|
1% |
|
|
1% |
|
|
—% |
|
Sales and excise taxes |
|
|
706 |
|
|
95 |
|
|
611 |
|
|
|
665 |
|
|
84 |
|
|
581 |
|
|
|
41 |
|
|
11 |
|
|
30 |
|
|
6% |
|
|
13% |
|
|
5% |
|
Property taxes |
|
|
547 |
|
|
— |
|
|
547 |
|
|
|
525 |
|
|
— |
|
|
525 |
|
|
|
22 |
|
|
— |
|
|
22 |
|
|
4% |
|
|
—% |
|
|
4% |
|
Corporate income taxes |
|
|
261 |
|
|
205 |
|
|
56 |
|
|
|
350 |
|
|
297 |
|
|
53 |
|
|
|
(89) |
|
|
(92) |
|
|
3 |
|
|
(25)% |
|
|
(31)% |
|
|
6% |
|
Other taxes |
|
|
206 |
|
|
74 |
|
|
132 |
|
|
|
186 |
|
|
67 |
|
|
119 |
|
|
|
20 |
|
|
7 |
|
|
13 |
|
|
11% |
|
|
10% |
|
|
11% |
|
Tax revenues |
|
$ |
5,018 |
|
$ |
3,246 |
|
$ |
1,772 |
|
|
$ |
4,878 |
|
$ |
3,215 |
|
$ |
1,663 |
|
|
$ |
140 |
|
$ |
31 |
|
$ |
109 |
|
|
3% |
|
|
1% |
|
|
7% |
|
Earnings on investments |
|
$ |
439 |
|
$ |
— |
|
$ |
439 |
|
|
$ |
455 |
|
$ |
— |
|
$ |
455 |
|
|
$ |
(16) |
|
$ |
— |
|
$ |
(16) |
|
|
(4)% |
|
|
—% |
|
|
(4)% |
|
Federal Reserve earnings |
|
|
71 |
|
|
71 |
|
|
— |
|
|
|
82 |
|
|
82 |
|
|
— |
|
|
|
(11) |
|
|
(11) |
|
|
— |
|
|
(13)% |
|
|
(13)% |
|
|
—% |
|
Sales of government resources |
|
|
24 |
|
|
11 |
|
|
13 |
|
|
|
19 |
|
|
5 |
|
|
14 |
|
|
|
5 |
|
|
6 |
|
|
(1) |
|
|
26% |
|
|
120% |
|
|
(7)% |
|
Other non-tax revenues |
|
|
164 |
|
|
31 |
|
|
133 |
|
|
|
165 |
|
|
38 |
|
|
127 |
|
|
|
(1) |
|
|
(7) |
|
|
6 |
|
|
(1)% |
|
|
(18)% |
|
|
5% |
|
Total non-tax revenues |
|
$ |
698 |
|
$ |
113 |
|
$ |
585 |
|
|
$ |
721 |
|
$ |
125 |
|
$ |
596 |
|
|
$ |
(23) |
|
$ |
(12) |
|
$ |
(11) |
|
|
(3)% |
|
|
(10)% |
|
|
(2)% |
|
Total revenues |
|
$ |
5,716 |
|
$ |
3,359 |
|
$ |
2,357 |
|
|
$ |
5,599 |
|
$ |
3,340 |
|
$ |
2,259 |
|
|
$ |
117 |
|
$ |
19 |
|
$ |
98 |
|
|
2% |
|
|
1% |
|
|
4% |
|
Estimated impact of inflation on total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
134 |
|
$ |
80 |
|
$ |
54 |
|
|
2% |
|
|
2% |
|
|
2% |
|||||||||
|
Estimated Impact of population growth on total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
30 |
|
|
18 |
|
|
12 |
|
|
1% |
|
|
1% |
|
|
1% |
|||||||||
1 State and local revenue excludes transfers from the federal government. See separate schedule and discussion of intergovernmental transfers at Note 23 – Intergovernmental transfers (Part II, Item 8 within this annual report).
2 Key changes are highlighted in gray in the table above and are discussed in the sections below.
2017 to 2018 | Federal individual income tax revenue
The federal individual income tax revenue increase of $96 billion can be attributed $98 billion* to higher taxable income, offset in part by a decrease of $2 billion* attributed to changes in in average tax rates.
Income changes*
The $98 billion increase in revenue attributable to higher taxable income reflected a $671 billion or 6% increase in aggregate AGI, as well as a $198 billion or 7% decrease in aggregate deductions and exemptions. Following are the income components of AGI shown by AGI group (cohort).
|
|
2018 |
|
2017 |
|
|
Changes |
|
|
(In billions, except percentages) |
Wages and Salaries |
|
Capital Gains |
|
Partnership and S-Corp |
|
All Other1 |
|
Total AGI |
|
|
|
Wages and Salaries |
|
Capital Gains |
|
Partnership and S-Corp |
|
All Other1 |
|
Total AGI |
|
|
|
Wages and Salaries |
|
Capital Gains |
|
Partnership and S-Corp |
|
All Other1 |
|
Total AGI |
|
Wages and Salaries |
|
Capital Gains |
Partnership and S-Corp |
All Other1 |
Total AGI |
||||||||||||||||||
|
Less than $1 |
$ |
22 |
|
$ |
17 |
|
$ |
(53) |
|
$ |
(197) |
|
$ |
(211) |
|
|
|
$ |
20 |
|
$ |
17 |
|
$ |
(55) |
|
$ |
(206) |
|
$ |
(224) |
|
|
|
$ |
2 |
|
$ |
- |
|
$ |
2 |
|
$ |
9 |
|
$ |
13 |
|
|
10% |
|
0% |
4% |
|
4% |
6% |
|
|
$1-$50K |
|
1,598 |
|
|
11 |
|
|
7 |
|
|
348 |
|
|
1,964 |
|
|
|
|
1,594 |
|
|
10 |
|
|
8 |
|
|
353 |
|
|
1,965 |
|
|
|
|
4 |
|
|
1 |
|
|
(1) |
|
|
(5) |
|
|
(1) |
|
|
0% |
|
10% |
|
(13)% |
|
(1)% |
0% |
|
$50,001-$75K |
|
1,022 |
|
|
12 |
|
|
10 |
|
|
269 |
|
|
1,313 |
|
|
|
|
991 |
|
|
11 |
|
|
10 |
|
|
264 |
|
|
1,276 |
|
|
|
|
31 |
|
|
1 |
|
|
- |
|
|
5 |
|
|
37 |
|
|
3% |
|
9% |
|
0% |
|
2% |
3% |
|
$75,001-$100K |
|
882 |
|
|
17 |
|
|
13 |
|
|
270 |
|
|
1,182 |
|
|
|
|
866 |
|
|
15 |
|
|
14 |
|
|
264 |
|
|
1,159 |
|
|
|
|
16 |
|
|
2 |
|
|
(1) |
|
|
6 |
|
|
23 |
|
2% |
|
13% |
|
(7)% |
|
2% |
2% |
|
|
$100,001-$200K |
|
2,092 |
|
|
67 |
|
|
61 |
|
|
616 |
|
|
2,836 |
|
|
|
|
1,992 |
|
|
59 |
|
|
61 |
|
|
557 |
|
|
2,669 |
|
|
|
|
100 |
|
|
8 |
|
|
- |
|
|
59 |
|
|
167 |
|
|
5% |
|
14% |
|
0% |
|
11% |
6% |
|
$200,001-$500K |
|
1,292 |
|
|
118 |
|
|
146 |
|
|
365 |
|
|
1,921 |
|
|
|
|
1,182 |
|
|
99 |
|
|
137 |
|
|
307 |
|
|
1,725 |
|
|
|
|
110 |
|
|
19 |
|
|
9 |
|
|
58 |
|
|
196 |
|
|
9% |
|
19% |
|
7% |
|
19% |
11% |
|
$500,001-$1 million |
|
406 |
|
|
86 |
|
|
124 |
|
|
114 |
|
|
730 |
|
|
|
|
371 |
|
|
73 |
|
|
124 |
|
|
92 |
|
|
660 |
|
|
|
|
35 |
|
|
13 |
|
|
- |
|
|
22 |
|
|
70 |
|
|
9% |
|
18% |
|
0% |
|
24% |
11% |
|
Over $1 million |
|
511 |
|
|
567 |
|
|
375 |
|
|
297 |
|
|
1,750 |
|
|
|
|
472 |
|
|
502 |
|
|
368 |
|
|
242 |
|
|
1,584 |
|
|
|
|
39 |
|
|
65 |
|
|
7 |
|
|
55 |
|
|
166 |
|
|
8% |
|
13% |
|
2% |
|
23% |
10% |
|
Total |
$ |
7,825 |
|
$ |
895 |
|
$ |
683 |
|
$ |
2,082 |
|
$ |
11,485 |
|
|
|
$ |
7,488 |
|
$ |
786 |
|
$ |
667 |
|
$ |
1,873 |
|
$ |
10,814 |
|
|
|
$ |
337 |
|
$ |
109 |
|
$ |
16 |
|
$ |
209 |
|
$ |
671 |
|
|
5% |
|
14% |
|
2% |
|
11% |
6% |
1 All Other includes interest, dividends, state income tax refunds, business or profession net income (loss), taxable individual retirement arrangement distributions, taxable pensions and annuities, taxable social security benefits, and other income (loss), less: self-employed SEP, self-employed health insurance, retirement account deductions, student loan interest deductions, tuition and fees deduction, domestic production activities deduction, and other deductions.
AGI by cohort
AGI increased for nearly all income cohorts, most significantly for the cohorts with AGI above $100,000, a group which saw its aggregate AGI increase over $599 billion or 9% for the year. The cohort with the largest dollar and rate increases in AGI was the one with AGI between $200,001 and $500,000, at an increase of $196 billion or 11%, driven primarily by higher wages and salaries but with increases across all sources of income. The increases in AGI for these cohorts were offset in part by a $1 billion or 0% decrease in AGI for the cohort where AGI is between $1 and $50,000, driven primarily by decreased All Other income.
AGI by income type
Over half of the overall $671 billion increase in AGI was driven by higher wages and salaries, which increased $337 billion or 5%. All AGI cohorts saw wage and salary growth. The largest dollar amount of growth, at an increase of $110 billion or 9%, was for the cohort with AGI between $200,001 and $500,000. The highest rate of wage and salary growth, at an increase of 10% or $2 billion, was for the cohort with AGI less than $1.
Net capital gains income increased $109 billion or 14%, comprising 16% of the overall increase in AGI. All AGI cohorts saw increases in net capital gains income. The largest dollar amount of growth, at an aggregate increase of $65 billion or 13%, was for the cohort with AGI over $1 million. The highest rate of growth, at 19% or $19 billion, was for the cohort with AGI between $200,001 and $500,000. The average daily closing price of the S&P 500 between these federal fiscal years (October 1 to September 30) increased 16%, which may have contributed to increases in capital gains.
Partnership and S-Corporation income increased $16 billion or 2%, comprising 2% of the overall increase in AGI. Experiences varied among cohorts. The largest dollar amount and highest rate of growth, at $9 billion or 7%, respectively, was for the cohort with AGI between $200,001 and $500,000.
Income within the “All Other” category shown in the table above increased $209 billion or 11%, comprising 31% of the overall increase in AGI. This increase was driven primarily by: a $96 billion or 7% increase in taxable retirement income, comprising taxable Individual Retirement Account (IRA), pension, annuity, and Social Security distributions; a $38 billion or 14% increase in dividend income; and a $19 billion or 18% increase in taxable interest income.
AGI mobility – numbers of income tax returns filed by income cohort
|
((In thousands, except percentages) |
|
2018 |
|
|
|
|
|
2017 |
|
|
|
|
Changes |
||||
|
Less than $1 |
|
1,980 |
|
|
|
|
|
2,045 |
|
|
|
|
|
(65) |
|
|
(3)% |
|
$1-$50K |
|
87,408 |
|
|
|
|
|
88,857 |
|
|
|
|
|
(1,449) |
|
|
(2)% |
|
$50,001-$75K |
|
21,335 |
|
|
|
|
|
20,775 |
|
|
|
|
|
560 |
|
|
3% |
|
$75,001-$100K |
|
13,641 |
|
|
|
|
|
13,375 |
|
|
|
|
|
266 |
|
|
2% |
|
$100,001-$200K |
|
20,848 |
|
|
|
|
|
19,678 |
|
|
|
|
|
1,170 |
|
|
6% |
|
$200,001-$500K |
|
6,733 |
|
|
|
|
|
6,057 |
|
|
|
|
|
676 |
|
|
11% |
|
$500,001-$1 million |
|
1,084 |
|
|
|
|
|
981 |
|
|
|
|
|
103 |
|
|
10% |
|
Over $1 million |
|
528 |
|
|
|
|
|
477 |
|
|
|
|
|
51 |
|
|
11% |
|
Total |
|
153,557 |
|
|
|
|
|
152,245 |
|
|
|
|
|
1,312 |
|
|
1% |
The number of income tax returns filed for the lowest income cohorts, those with AGI of $50,000 or less, decreased by 1.5 million tax returns in aggregate, while the number of tax returns filed increased for all other AGI cohorts. The group with the highest increase in number of returns filed was the cohort with AGI between $100,001 and $200,000, at an increase of 1.2 million returns, while the groups with the highest percentage increase in the number of returns filed were the cohorts with AGI between $200,001 and $500,000 and with AGI greater than $1 million, both at an increase of 11%.
Deductions and exemptions
1 Limitations represents the effect of limiting taxable income to no less than zero. If the combination of deductions and exemptions exceeds AGI, the excess deductions and exemptions are disallowed.
The $198 billion decrease in deductions and exemptions from 2017 to 2018 reflected a $389 billion shift in total deductions and exemptions from larger itemized deductions and exemptions and into smaller standard deductions, presumably largely due to tax law changes from the TCJA. Unfortunately, we are unable to separate the impact of changes in behavior due to the TCJA. The shift from itemized deductions and exemptions to standard deductions occurred across all AGI cohorts. The cohort with the largest dollar change, at a decrease of $100 billion or 15% in deductions and exemptions (before limitations), is the cohort with AGI between $100,001 and $200,000. The cohort with the largest percent change, at a decrease of 75% or $10 billion, is the cohort with AGI less than $1. These decreases in deductions and exemptions were offset in part by lower disallowances due to limitations, which were also seen across all AGI cohorts.
Tax rate changes
There were several key statutory individual income tax rate changes during this period due to the Tax Cuts and Jobs Act (TCJA). The TCJA reduced individual income tax rates overall, effective January 1, 2018, including:
2017 to 2018 | State and local individual income tax revenue
The $41 billion state and local individual income tax revenue increase can be attributed $23 billion** to higher taxable income and $18 billion** to changes in average tax rates.
Income changes**
The $23 billion increase attributable to higher individual taxable income reflected an approximately $506 billion or 6% increase in the aggregate AGI of all individual taxpayers in all states that tax individual income. Following are the income components of AGI shown by AGI cohort.
|
|
2018 |
|
2017 |
|
|
Changes |
|
|
(In billions, except percentages) |
Wages and Salaries |
|
Capital Gains |
|
Partnership and S-Corp |
|
All Other1 |
|
Total AGI |
|
|
|
Wages and Salaries |
|
Capital Gains |
|
Partnership and S-Corp |
|
All Other1 |
|
Total AGI |
|
|
|
Wages and Salaries |
|
Capital Gains |
|
Partnership and S-Corp |
|
All Other1 |
|
Total AGI |
|
Wages and Salaries |
|
Capital Gains |
Partnership and S-Corp |
All Other1 |
Total AGI |
||||||||||||||||||
|
Less than $1 |
$ |
13 |
|
$ |
12 |
|
$ |
(37) |
|
$ |
(143) |
|
$ |
(155) |
|
|
|
$ |
12 |
|
$ |
11 |
|
$ |
(35) |
|
$ |
(144) |
|
$ |
(156) |
|
|
|
$ |
1 |
|
$ |
1 |
|
$ |
(2) |
|
$ |
1 |
|
$ |
1 |
|
|
8% |
|
9% |
6% |
|
(1)% |
(1)% |
|
|
$1-$50K |
|
1,222 |
|
|
11 |
|
|
5 |
|
|
285 |
|
|
1,523 |
|
|
|
|
1,221 |
|
|
9 |
|
|
6 |
|
|
290 |
|
|
1,526 |
|
|
|
|
1 |
|
|
2 |
|
|
(1) |
|
|
(5) |
|
|
(3) |
|
|
0% |
|
22% |
|
(17)% |
|
(2)% |
0% |
|
$50,001-$75K |
|
794 |
|
|
11 |
|
|
8 |
|
|
219 |
|
|
1,032 |
|
|
|
|
775 |
|
|
9 |
|
|
8 |
|
|
210 |
|
|
1,002 |
|
|
|
|
19 |
|
|
2 |
|
|
0 |
|
|
9 |
|
|
30 |
|
|
2% |
|
22% |
|
0% |
|
4% |
3% |
|
$75,001-$100K |
|
704 |
|
|
14 |
|
|
10 |
|
|
209 |
|
|
937 |
|
|
|
|
689 |
|
|
11 |
|
|
10 |
|
|
206 |
|
|
916 |
|
|
|
|
15 |
|
|
3 |
|
|
0 |
|
|
3 |
|
|
21 |
|
2% |
|
27% |
|
0% |
|
1% |
2% |
|
|
$100,001-$200K |
|
1,647 |
|
|
55 |
|
|
47 |
|
|
482 |
|
|
2,231 |
|
|
|
|
1,569 |
|
|
44 |
|
|
46 |
|
|
451 |
|
|
2,110 |
|
|
|
|
78 |
|
|
11 |
|
|
1 |
|
|
31 |
|
|
121 |
|
|
5% |
|
25% |
|
2% |
|
7% |
6% |
|
$200,001-$500K |
|
1,013 |
|
|
89 |
|
|
112 |
|
|
271 |
|
|
1,485 |
|
|
|
|
933 |
|
|
72 |
|
|
108 |
|
|
227 |
|
|
1,340 |
|
|
|
|
80 |
|
|
17 |
|
|
4 |
|
|
44 |
|
|
145 |
|
|
9% |
|
24% |
|
4% |
|
19% |
11% |
|
$500,001-$1 million |
|
311 |
|
|
61 |
|
|
97 |
|
|
90 |
|
|
559 |
|
|
|
|
283 |
|
|
50 |
|
|
94 |
|
|
79 |
|
|
506 |
|
|
|
|
28 |
|
|
11 |
|
|
3 |
|
|
11 |
|
|
53 |
|
|
10% |
|
22% |
|
3% |
|
14% |
10% |
|
Over $1 million |
|
390 |
|
|
397 |
|
|
283 |
|
|
202 |
|
|
1,272 |
|
|
|
|
355 |
|
|
338 |
|
|
272 |
|
|
169 |
|
|
1,134 |
|
|
|
|
35 |
|
|
59 |
|
|
11 |
|
|
33 |
|
|
138 |
|
|
10% |
|
17% |
|
4% |
|
20% |
12% |
|
Total |
$ |
6,094 |
|
$ |
650 |
|
$ |
525 |
|
$ |
1,615 |
|
$ |
8,884 |
|
|
|
$ |
5,837 |
|
$ |
544 |
|
$ |
509 |
|
$ |
1,488 |
|
$ |
8,378 |
|
|
|
$ |
257 |
|
$ |
106 |
|
$ |
16 |
|
$ |
127 |
|
$ |
506 |
|
|
4% |
|
19% |
|
3% |
|
9% |
6% |
AGI by cohort
For states that tax individual income, AGI increased for nearly all income cohorts, most significantly for the cohorts with AGI above $100,000, a group which saw its aggregate AGI increase over $457 billion or 9% for the year. The largest dollar amount of growth, at an aggregate increase of $145 billion or 11%, was for the cohort with AGI between $200,001 and $500,000, driven primarily by higher wages and salaries but reflecting increases across all sources of income. The highest rate of AGI growth, at 12% or $138 billion, was for the cohort with AGI greater than $1 million, driven primarily by net capital gains but reflecting increases across all sources of income. The increases in AGI for these cohorts were offset in part by an aggregate $3 billion decrease in AGI, a flat rate change, for the cohort where AGI is between $1 and $50,000, driven primarily by decreased All Other income.
AGI by income type
Over half of the overall $506 billion increase in AGI in states that tax individual income was driven by higher wages and salaries, which increased $257 billion or 4%. All AGI cohorts saw wage and salary growth. The largest dollar amount of growth, at an increase of $80 billion or 9%, was for the cohort with AGI between $200,001 and $500,000. The highest rate of wage and salary growth, at an increase of 10% or $28 billion, was for the cohort with AGI between $500,001 and $1 million.
Net capital gains income increased $106 billion or 19%, comprising nearly 21% of the overall increase in AGI in states that tax individual income. All AGI cohorts saw increases in net capital gains income. The largest dollar amount of growth, at an aggregate increase of $59 billion or 17%, was for the cohort with AGI over $1 million. The highest rate of growth, at an increase of 27% or $3 billion, was for the cohort with AGI between $75,001 and $100,000. The average daily closing price of the S&P 500 between these state and local fiscal years (July 1 to June 30) increased 16%, which may have contributed to increases in capital gains.
Partnership and S-Corporation income increased $16 billion or 3%, comprising just over 3% of the overall increase in AGI in states that tax individual income. Experiences varied among cohorts. The largest dollar amount and rate of growth, at an increase of $11 billion or 4%, was for the cohort with AGI greater than $1 million.
Income within the “All Other” category shown in the table above increased $127 billion or 9%, comprising 25% of the overall increase in AGI. This increase was driven primarily by a $49 billion or 6% increase in taxable income from IRAs, pensions, and annuities; a $25 billion or 13% increase in dividend income; and a $20 billion or 8% increase in taxable Social Security benefits.
Tax rate changes
The increase in state and local individual income tax revenue attributable to tax rate changes is due to both more income in higher tax rate brackets and changes in tax rates. Aggregate AGI for all groups with AGI greater than $200,000 increased 2%, while the aggregate AGI for all groups with AGI less than $50,000 decreased 1%, and the aggregate AGI for groups with AGI between $50,001 and $200,000 remained flat. There were multiple statutory tax rate changes at the state level during this period. Three states increased their income tax rates. Hawaii had the largest rate increase, raising the rate on its highest income bracket by 2.8 percentage points. Three states decreased their income tax rates. Maine had the largest rate decrease, lowering the rate on its highest income bracket by 3.0 percentage points.
2017 to 2018 | Federal sales and excise taxes
The $11 billion increase in revenue from federal sales and excise taxes, specifically selective sales taxes, primarily reflects an $8 billion or 38% increase in other selective sales taxes and a $4 billion or 9% increase in motor fuel taxes.
The $8 billion increase in other selective sales taxes is due in part to a $5 billion increase (% increase is not meaningful) related to fees on health insurance providers, which can be attributed in part to the one-year moratorium on the health insurers fees that existed for 2017 only, as well as due to a $3 billion or 339% increase in other federal fund excise taxes. The other federal fund excise taxes comprise miscellaneous excise taxes, primarily on non-major health care items (e.g. tanning beds).
The $4 billion increase in motor fuel tax revenue is primarily attributable to increases in highway trust fund deposits and transportation fuels tax. During this period, the number of miles driven increased 1% while the federal gas tax rates remained unchanged.
2017 to 2018 | State and local sales and excise taxes
The $30 billion increase in revenue from state and local sales and excise taxes reflects a $22 billion or 6% increase in general sales tax revenues and a $10 billion or 13% increase in selective sales tax revenues.
General sales tax revenues
General sales tax revenues increased due to increased consumption of taxable goods and services, offset in part by a net decrease in unweighted state-level general sales tax rates. Household consumption of all categories of taxable goods and services increased during the period, led by recreation and entertainment ($39 billion or 5% increase)**, principal and down payments on cars ($36 billion or 10%)**, and food and non-alcoholic beverages away from home ($34 billion or 6%)**.38 State-level general sales tax rates did not increase in any state, while there was a decrease in one state of 0.25 percentage points.39 During the periods presented, local governments both increased and decreased their sales tax rates.
Selective sales tax revenues
Selective sales tax revenues increased across nearly every major category, led by a $3 billion or 7% increase in tax revenues from motor fuels, a $2 billion or 7% increase in tax revenues from insurance premiums, and a $1 billion or 4% increase in tax on tobacco products. The increases in selective sales tax revenues are due to changes in both consumption of the selected goods and services and the related tax rates. Unit consumption of motor fuel/oil increased 13%**40, spending on insurance premiums increased 7%41, and unit consumption of tobacco increased 2%**42. The unweighted average of gas and tobacco tax rates across all states increased 7% and 2%, respectively, during this period.39 We are not aware of an aggregated source of data for state and local government tax rates on insurance premiums.
2017 to 2018 | Property taxes
The $22 billion or 4% growth in revenue from property taxes reflects a 6%** increase in the median home value. In addition, there were various changes in property tax rates in 2018. The aggregate unweighted average of the nominal residential property tax rate for the largest city in each state increased 1%.39 Among this group, the nominal residential property tax rate increased in the largest city in 22 states, with a maximum increase of 13% in Indianapolis, IN, offset in part by decreases in 14 states, with a maximum decrease of 9% in Birmingham, AL. 43
2017 to 2018 | Federal corporate income taxes
Federal corporate income tax revenues decreased $92 billion or 31%. The federal statutory corporate income tax rate in the US was 35% until December 31, 2017, the first quarter of the fiscal year, and then was reduced to 21% on January 1, 2018 with the enactment of the TCJA, for the remaining three quarters of the fiscal year. For companies headquartered in the US that earn income from overseas sources, such income was taxed only when repatriated back to the US. Effective January 1, 2018, the TCJA requires foreign income of US businesses to be taxed at 21% but provides one-time reduced tax rates for all undistributed and deferred post-1986 foreign profits accumulated in the form liquid assets (15.5% tax rate) and illiquid assets (8% tax rate), which can be paid in installments over eight years, interest-free. The IRS has not yet published 2018 C-Corporation taxable income.
2017 to 2018 | State and local earnings on investments44
State and local earnings on investments (primarily funds held by retirement, workers’ compensation, and other trusts) decreased $16 billion or 4% due to a decrease in stock market performance, offset in part by a $330 billion or 4% increase in investment balances. During these periods, these funds were invested primarily in US corporate equities (57% of funds invested for both periods), corporate and foreign bonds (12% for both periods), mutual funds (11% for both periods), and miscellaneous assets (increasing from 7% to 8%). Using state and local fiscal year (July 1 to June 30) starting and ending stock prices to calculate the annual changes, there were decreases of 9%, 60%, 101%, and 148% in the annual change in the S&P 500, FTSE, DAX, and NIKKEI, respectively. During the same period, the US Prime rate increased from 4.1% to 5.4%. Of the overall 4% increase in investment balances, the largest increases were in corporate equities ($147 billion or 6% increase), corporate and foreign bonds ($55 billion or 11%), and mutual funds ($35 billion or 7%), offset in part by decreases in commercial paper ($9 billion or 17%), mortgage-backed securities ($5 billion or 64%), and security repurchase agreements ($1 billion or 17%).
2017 to 2018 | Federal Reserve earnings
The $11 billion or 13% decrease in revenue from Federal Reserve earnings reflects a decrease in income of the Federal Reserve itself, the majority of which is remitted to the Treasury by law. The Federal Reserve’s income declined as it purchased $152 billion or 6% fewer securities (including Treasury securities and federal agency and government-sponsored enterprise mortgage-backed securities) and it earned returns on those securities.
Note that the interest payments made by the federal government to the Federal Reserve and the earnings received by the federal government from the Federal Reserve can be seen as offsetting each other, in part. This is because these are largely the same dollars; the federal government pays interest on its debt securities held by the Federal Reserve, the Federal Reserve receives those dollars, and then the Federal Reserve remits most of those dollars back to the federal government. We report the inflows in non-tax revenues and the outflows in net interest paid because the Federal Reserve is a separate legal entity from the federal government.
|
|
|
2018 |
|
|
2013 |
|
|
Changes 2 |
||||||||||||||||||||||||||||||
|
(In billions, except percentages) |
|
Total |
|
Federal |
|
State and Local 1 |
|
|
Total |
|
Federal |
|
State and Local 1 |
|
|
Total |
|
Federal |
|
State and Local 1 |
|
Total |
|
Federal |
|
State and Local 1 |
||||||||||||
|
Individual income taxes |
|
$ |
2,109 |
|
$ |
1,683 |
|
$ |
426 |
|
|
$ |
1,656 |
|
$ |
1,316 |
|
$ |
340 |
|
|
$ |
453 |
|
$ |
367 |
|
$ |
86 |
|
|
27% |
|
|
28% |
|
|
25% |
|
Payroll taxes |
|
|
1,189 |
|
|
1,189 |
|
|
— |
|
|
|
966 |
|
|
966 |
|
|
— |
|
|
|
223 |
|
|
223 |
|
|
— |
|
|
23% |
|
|
23% |
|
|
—% |
|
Sales and excise taxes |
|
|
706 |
|
|
95 |
|
|
611 |
|
|
|
588 |
|
|
84 |
|
|
504 |
|
|
|
118 |
|
|
11 |
|
|
107 |
|
|
20% |
|
|
13% |
|
|
21% |
|
Property taxes |
|
|
547 |
|
|
— |
|
|
547 |
|
|
|
454 |
|
|
— |
|
|
454 |
|
|
|
93 |
|
|
— |
|
|
93 |
|
|
20% |
|
|
—% |
|
|
20% |
|
Corporate income taxes |
|
|
261 |
|
|
205 |
|
|
56 |
|
|
|
326 |
|
|
273 |
|
|
53 |
|
|
|
(65) |
|
|
(68) |
|
|
3 |
|
|
(20)% |
|
|
(25)% |
|
|
6% |
|
Other taxes |
|
|
206 |
|
|
74 |
|
|
132 |
|
|
|
174 |
|
|
60 |
|
|
114 |
|
|
|
32 |
|
|
14 |
|
|
18 |
|
|
18% |
|
|
23% |
|
|
16% |
|
Tax revenues |
|
$ |
5,018 |
|
$ |
3,246 |
|
$ |
1,772 |
|
|
$ |
4,164 |
|
$ |
2,699 |
|
$ |
1,465 |
|
|
$ |
854 |
|
$ |
547 |
|
$ |
307 |
|
|
21% |
|
|
20% |
|
|
21% |
|
Earnings on investments |
|
$ |
439 |
|
$ |
— |
|
$ |
439 |
|
|
$ |
378 |
|
$ |
— |
|
$ |
378 |
|
|
$ |
61 |
|
$ |
— |
|
$ |
61 |
|
|
16% |
|
|
—% |
|
|
16% |
|
Federal Reserve earnings |
|
|
71 |
|
|
71 |
|
|
— |
|
|
|
76 |
|
|
76 |
|
|
— |
|
|
|
(5) |
|
|
(5) |
|
|
— |
|
|
(7)% |
|
|
(7)% |
|
|
—% |
|
Sales of government resources |
|
|
24 |
|
|
11 |
|
|
13 |
|
|
|
26 |
|
|
12 |
|
|
14 |
|
|
|
(2) |
|
|
(1) |
|
|
(1) |
|
|
(8)% |
|
|
(8)% |
|
|
(7)% |
|
Other non-tax revenues |
|
|
164 |
|
|
31 |
|
|
133 |
|
|
|
128 |
|
|
16 |
|
|
112 |
|
|
|
36 |
|
|
15 |
|
|
21 |
|
|
28% |
|
|
94% |
|
|
19% |
|
Total non-tax revenues |
|
$ |
698 |
|
$ |
113 |
|
$ |
585 |
|
|
$ |
608 |
|
$ |
104 |
|
$ |
504 |
|
|
$ |
90 |
|
$ |
9 |
|
$ |
81 |
|
|
15% |
|
|
9% |
|
|
16% |
|
Total revenues |
|
$ |
5,716 |
|
$ |
3,359 |
|
$ |
2,357 |
|
|
$ |
4,772 |
|
$ |
2,803 |
|
$ |
1,969 |
|
|
$ |
944 |
|
$ |
556 |
|
$ |
388 |
|
|
20% |
|
|
20% |
|
|
20% |
|
Estimated impact of inflation on total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
359 |
|
$ |
211 |
|
$ |
148 |
|
|
8% |
|
|
8% |
|
|
8% |
|||||||||
|
Estimated impact of population growth on total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
163 |
|
|
96 |
|
|
67 |
|
|
3% |
|
|
3% |
|
|
3% |
|||||||||
1 State and local revenue excludes transfers from the federal government. See separate schedule and discussion of intergovernmental transfers at Note 23 – Intergovernmental transfers (Part II, Item 8 within this annual report).
2 Key changes are highlighted in gray in the table above and are discussed in the sections below.
2013 to 2018 | Federal individual income tax revenue
The federal individual income tax revenue increase of $367 billion can be attributed $346 billion* to higher taxable income and $21 billion* to changes in average tax rates.
Income changes*
The $346 billion increase in revenue attributed to higher taxable income reflected a $2,390 billion or 26% increase in aggregate AGI, offset in part by a $71 billion or 3% increase in aggregate deductions and exemptions. Following are the income components of AGI shown by AGI group (cohort).
|
|
2018 |
|
2013 |
|
|
Changes |
|
|
(In billions, except percentages) |
Wages and Salaries |
|
Capital Gains |
|
Partnership and S-Corp |
|
All Other1 |
|
Total AGI |
|
|
|
Wages and Salaries |
|
Capital Gains |
|
Partnership and S-Corp |
|
All Other1 |
|
Total AGI |
|
|
|
Wages and Salaries |
|
Capital Gains |
|
Partnership and S-Corp |
|
All Other1 |
|
Total AGI |
|
Wages and Salaries |
|
Capital Gains |
Partnership and S-Corp |
All Other1 |
Total AGI |
||||||||||||||||||
|
Less than $1 |
$ |
22 |
|
$ |
17 |
|
$ |
(53) |
|
$ |
(197) |
|
$ |
(211) |
|
|
|
$ |
19 |
|
$ |
14 |
|
$ |
(43) |
|
$ |
(187) |
|
$ |
(197) |
|
|
|
$ |
3 |
|
$ |
3 |
|
$ |
(10) |
|
$ |
(10) |
|
$ |
(14) |
|
|
16% |
|
21% |
(23)% |
|
(5)% |
(7)% |
|
|
$1-$50K |
|
1,598 |
|
|
11 |
|
|
7 |
|
|
348 |
|
|
1,964 |
|
|
|
|
1,552 |
|
|
6 |
|
|
7 |
|
|
386 |
|
|
1,951 |
|
|
|
|
46 |
|
|
5 |
|
|
0 |
|
|
(38) |
|
|
13 |
|
|
3% |
|
83% |
|
0% |
|
(10)% |
1% |
|
$50,001-$75K |
|
1,022 |
|
|
12 |
|
|
10 |
|
|
269 |
|
|
1,313 |
|
|
|
|
913 |
|
|
8 |
|
|
9 |
|
|
250 |
|
|
1,180 |
|
|
|
|
109 |
|
|
4 |
|
|
1 |
|
|
19 |
|
|
133 |
|
|
12% |
|
50% |
|
11% |
|
8% |
11% |
|
$75,001-$100K |
|
882 |
|
|
17 |
|
|
13 |
|
|
270 |
|
|
1,182 |
|
|
|
|
816 |
|
|
11 |
|
|
13 |
|
|
238 |
|
|
1,078 |
|
|
|
|
66 |
|
|
6 |
|
|
0 |
|
|
32 |
|
|
104 |
|
8% |
|
55% |
|
0% |
|
13% |
10% |
|
|
$100,001-$200K |
|
2,092 |
|
|
67 |
|
|
61 |
|
|
616 |
|
|
2,836 |
|
|
|
|
1,649 |
|
|
39 |
|
|
55 |
|
|
439 |
|
|
2,182 |
|
|
|
|
443 |
|
|
28 |
|
|
6 |
|
|
177 |
|
|
654 |
|
|
27% |
|
72% |
|
11% |
|
40% |
30% |
|
$200,001-$500K |
|
1,292 |
|
|
118 |
|
|
146 |
|
|
365 |
|
|
1,921 |
|
|
|
|
856 |
|
|
62 |
|
|
115 |
|
|
222 |
|
|
1,255 |
|
|
|
|
436 |
|
|
56 |
|
|
31 |
|
|
143 |
|
|
666 |
|
|
51% |
|
90% |
|
27% |
|
64% |
53% |
|
$500,001-$1 million |
|
406 |
|
|
86 |
|
|
124 |
|
|
114 |
|
|
730 |
|
|
|
|
270 |
|
|
47 |
|
|
97 |
|
|
70 |
|
|
484 |
|
|
|
|
136 |
|
|
39 |
|
|
27 |
|
|
44 |
|
|
246 |
|
|
50% |
|
83% |
|
28% |
|
63% |
51% |
|
Over $1 million |
|
511 |
|
|
567 |
|
|
375 |
|
|
297 |
|
|
1,750 |
|
|
|
|
357 |
|
|
331 |
|
|
279 |
|
|
195 |
|
|
1,162 |
|
|
|
|
154 |
|
|
236 |
|
|
96 |
|
|
102 |
|
|
588 |
|
|
43% |
|
71% |
|
34% |
|
52% |
51% |
|
Total |
$ |
7,825 |
|
$ |
895 |
|
$ |
683 |
|
$ |
2,082 |
|
$ |
11,485 |
|
|
|
$ |
6,432 |
|
$ |
518 |
|
$ |
532 |
|
$ |
1,613 |
|
$ |
9,095 |
|
|
|
$ |
1,393 |
|
$ |
377 |
|
$ |
151 |
|
$ |
469 |
|
$ |
2,390 |
|
|
22% |
|
73% |
|
28% |
|
29% |
26% |
1 All Other includes interest, dividends, state income tax refunds, business or profession net income (loss), taxable individual retirement arrangement distributions, taxable pensions and annuities, taxable social security benefits, and other income (loss), less: self-employed SEP, self-employed health insurance, retirement account deductions, student loan interest deductions, tuition and fees deduction, domestic production activities deduction, and other deductions.
AGI by cohort
AGI increased for nearly all income cohorts, most significantly for the cohorts with AGI above $100,000, a group which saw its aggregate AGI increase over $2,154 billion or 42%. The cohort with the largest dollar and percentage increase in AGI is the one with AGI between $200,001 and $500,000, at an increase of $666 billion or 53%, driven primarily by higher wages and salaries but with increases across all sources of income. The increases in AGI for these cohorts were offset in part by a $14 billion or 7% decrease in AGI for the cohort where AGI is less than $1, driven by decreased Partnership and S-Corporation and All Other income.
AGI by income type
Just over 58% of the overall $2,390 billion increase in AGI was driven by higher wages and salaries, which increased $1,393 billion or 22%. All AGI cohorts saw wage and salary growth. The largest dollar amount of growth, at an increase of $443 billion or 27%, was for the cohort with AGI between $100,001 and $200,000. The highest rate of wage and salary growth, at 51% or $436 billion, was for the cohort with AGI between $200,001 and $500,000.
Net capital gains income increased $377 billion or 73%, comprising 16% of the overall increase in AGI. All AGI cohorts saw increases in net capital gains income. The largest dollar amount of growth, at an increase of $236 billion or 71%, was for the cohort with AGI over $1 million. The highest rate of growth, at 90% or $56 billion, was for the cohort with AGI between $200,001 and $500,000. The average daily closing price of the S&P 500 between these federal fiscal years (October 1 to September 30) increased 75%, which may have contributed to increases in capital gains.
Partnership and S-Corporation income increased $151 billion or 28%, comprising 6% of the overall increase in AGI. Most of the increase was for the cohorts with AGI of $200,001 and greater, where Partnership and S-Corporation income increased an aggregate of $154 billion or 31%. The highest rate of growth, at 34% or $96 billion, was for the cohort with AGI greater than $1 million.
Income within the “All Other” category shown in the table above increased $469 billion or 29%, comprising 20% of the overall increase in AGI. This increase was driven primarily by a $311 billion or 29% increase in taxable retirement income, with IRA, pension, and annuity income comprising 70% of the total change. The largest dollar amount of taxable retirement income growth, at an increase of $154 billion or 49%, was for the cohort with AGI between $100,001 and $200,000. The highest rate of taxable retirement income growth, at 93% or $96 billion, was for the cohort with AGI between $200,001 and $500,000. During this period, the population of those aged 65 years and older, the cohort most likely to be taking retirement income distributions, increased 18%.
AGI mobility – numbers of income tax returns filed by income cohort
|
((In thousands, except percentages) |
|
2018 |
|
|
|
|
|
2013 |
|
|
|
|
Changes |
||||
|
Less than $1 |
|
1,980 |
|
|
|
|
|
2,116 |
|
|
|
|
|
(136) |
|
|
(6)% |
|
$1-$50K |
|
87,408 |
|
|
|
|
|
91,292 |
|
|
|
|
|
(3,884) |
|
|
(4)% |
|
$50,001-$75K |
|
21,335 |
|
|
|
|
|
19,168 |
|
|
|
|
|
2,167 |
|
|
11% |
|
$75,001-$100K |
|
13,641 |
|
|
|
|
|
12,457 |
|
|
|
|
|
1,184 |
|
|
10% |
|
$100,001-$200K |
|
20,848 |
|
|
|
|
|
16,231 |
|
|
|
|
|
4,617 |
|
|
28% |
|
$200,001-$500K |
|
6,733 |
|
|
|
|
|
4,405 |
|
|
|
|
|
2,328 |
|
|
53% |
|
$500,001-$1 million |
|
1,084 |
|
|
|
|
|
719 |
|
|
|
|
|
365 |
|
|
51% |
|
Over $1 million |
|
528 |
|
|
|
|
|
358 |
|
|
|
|
|
170 |
|
|
47% |
|
Total |
|
153,557 |
|
|
|
|
|
146,746 |
|
|
|
|
|
6,811 |
|
|
5% |
The number of income tax returns filed for the lowest income cohorts, those with AGI of $50,000 or less, decreased by more than 4.0 million tax returns in aggregate, while the number of tax returns filed increased for all other AGI cohorts. The group with the highest increase in the number of returns filed was the cohort with AGI between $100,001 and $200,000, at an increase of over 4.6 million returns, while the group with the highest percentage increase in the number of returns filed was the cohort with AGI between $200,001 and $500,000, at an increase of 53%.
Deductions and exemptions
|
|
2018 |
|
|
|
2013 |
|
|
|
Changes |
||||||||||||||||||||||||||||||||||||||||||||||||||
|
(In billions, except percentages) |
Itemized Deductions |
|
Standard Deductions |
|
Exemptions |
|
Limitations1 |
|
Total Deductions/ Exemptions |
|
|
|
Itemized Deductions |
|
Standard Deductions |
|
Exemptions |
|
Limitations1 |
|
Total Deductions/ Exemptions |
|
|
|
Itemized Deductions |
|
Standard Deductions |
|
Exemptions |
|
Limitations1 |
|
Total Deductions/ Exemptions |
|
Itemized Deductions |
|
Standard Deductions |
Exemptions |
Limitations1 |
Total Deductions/ Exemptions |
|||||||||||||||||||
|
Less than $1 |
$ |
— |
|
$ |
— |
|
$ |
2 |
|
$ |
(213) |
|
$ |
(211) |
|
|
|
$ |
— |
|
$ |
— |
|
$ |
13 |
|
$ |
(210) |
|
$ |
(197) |
|
|
|
$ |
— |
|
$ |
— |
|
$ |
(11) |
|
$ |
(3) |
|
$ |
(14) |
|
|
—% |
|
—% |
|
(85)% |
|
1% |
(7)% |
|
|
$1-$50K |
|
85 |
|
|
1,078 |
|
|
143 |
|
|
(162) |
|
|
1,144 |
|
|
|
|
173 |
|
|
623 |
|
|
593 |
|
|
(215) |
|
|
1,174 |
|
|
|
|
(88) |
|
|
455 |
|
|
(450) |
|
|
53 |
|
|
(30) |
|
|
(51)% |
|
73% |
(76)% |
|
(25)% |
(3)% |
||
|
$50,001-$75K |
|
79 |
|
|
292 |
|
|
44 |
|
|
7 |
|
|
422 |
|
|
|
|
145 |
|
|
111 |
|
|
162 |
|
|
(2) |
|
|
416 |
|
|
|
|
(66) |
|
|
181 |
|
|
(118) |
|
|
9 |
|
|
6 |
|
|
(46)% |
|
163% |
|
(73)% |
(450)% |
1% |
||
|
$75,001-$100K |
|
83 |
|
|
195 |
|
|
32 |
|
|
6 |
|
|
316 |
|
|
|
|
151 |
|
|
58 |
|
|
119 |
|
|
(1) |
|
|
327 |
|
|
|
|
(68) |
|
|
137 |
|
|
(87) |
|
|
7 |
|
|
(11) |
|
|
(45)% |
|
236% |
(73)% |
|
(700)% |
(3)% |
||
|
$100,001-$200K |
|
229 |
|
|
278 |
|
|
53 |
|
|
21 |
|
|
581 |
|
|
|
|
336 |
|
|
40 |
|
|
172 |
|
|
(4) |
|
|
544 |
|
|
|
|
(107) |
|
|
238 |
|
|
(119) |
|
|
25 |
|
|
37 |
|
|
(32)% |
|
595% |
|
(69)% |
|
(625)% |
7% |
|
|
$200,001-$500K |
|
161 |
|
|
64 |
|
|
15 |
|
|
26 |
|
|
266 |
|
|
|
|
185 |
|
|
3 |
|
|
42 |
|
|
(1) |
|
|
229 |
|
|
|
|
(24) |
|
|
61 |
|
|
(27) |
|
|
27 |
|
|
37 |
|
|
(13)% |
|
2,033% |
|
(64)% |
|
nm |
16% |
|
|
$500,001-$1 million |
|
54 |
|
|
7 |
|
|
— |
|
|
11 |
|
|
72 |
|
|
|
|
60 |
|
|
1 |
|
|
2 |
|
|
(1) |
|
|
62 |
|
|
|
|
(6) |
|
|
6 |
|
|
(2) |
|
|
12 |
|
|
10 |
|
|
(10)% |
|
600% |
|
(100)% |
|
nm |
16% |
|
|
Over $1 million |
|
146 |
|
|
2 |
|
|
— |
|
|
39 |
|
|
187 |
|
|
|
|
151 |
|
|
— |
|
|
1 |
|
|
(1) |
|
|
151 |
|
|
|
|
(5) |
|
|
2 |
|
|
(1) |
|
|
40 |
|
|
36 |
|
|
(3)% |
|
100% |
|
(100)% |
|
nm |
24% |
|
|
Total |
$ |
837 |
|
$ |
1,916 |
|
$ |
289 |
|
$ |
(265) |
|
$ |
2,777 |
|
|
|
$ |
1,201 |
|
$ |
836 |
|
$ |
1,104 |
|
$ |
(435) |
|
$ |
2,706 |
|
|
|
$ |
(364) |
|
$ |
1,080 |
|
$ |
(815) |
|
$ |
170 |
|
$ |
71 |
|
|
(30)% |
|
129% |
|
(74)% |
|
(39)% |
3% |
|
1 Limitations represents the effect of limiting taxable income to no less than zero. If the combination of deductions and exemptions exceeds AGI, the excess deductions and exemptions are disallowed.
nm An “nm” reference in the table means the figure is not meaningful.
The $71 billion increase in net deductions and exemptions during this period was impacted significantly by the shift in mix of deductions and exemptions discussed in the 2017 to 2018 comparison above, presumably driven by the TCJA. As we are unable to isolate the impact of the TCJA, we have excluded the 2017 to 2018 comparison here (see above for that analysis) and instead compare 2013 to 2017 in this section. Excluding the change from 2017 to 2018, the change in total deductions/exemptions in the table above would be a $269 billion increase instead of a $71 billion increase. Most of the adjusted $269 billion increase was for itemized deductions, which increased $174 billion or 14%. However, standard deductions also increased ($67 billion or 8%), as did exemptions ($49 billion or 5%) and limitations ($21 billion or 5%). Cohorts with AGI of $100,000 or less experienced at least a partial shift from itemized deductions to standard deductions, whereas cohorts with AGI of $100,001 or greater experienced increases in both itemized and standardized deductions. Changes in exemptions and limitations varied amongst the cohorts with no discernable pattern.
Tax rate changes
There were several key statutory individual income tax rate changes during this period, among them:
2013 to 2018 | Payroll tax revenue
The $223 billion increase in payroll tax revenue was driven primarily by a $184 billion or 27% increase in Social Security tax revenues. These increased tax revenues reflect a $160 billion* increase attributable to higher taxable income, driven by a $1,359 billion* or 23%* increase in earnings subject to Social Security taxes.
The remaining $24 billion* increase in Social Security tax revenues is attributable to higher tax rates in 2018, reflecting a temporary reduction of 2 percentage points in the employee share of Social Security tax rate for calendar years 2011 and 2012. Federal fiscal year 2013 includes 3 months of calendar 2012, therefore a quarter of the lower Social Security tax rate was included in the fiscal year 2013 tax revenues. The overall Social Security tax rate (employee and employer combined) was 12.4%* in fiscal year 2018 and 11.9%* in fiscal year 2013.
2013 to 2018 | State and local sales and excise taxes
The $107 billion growth in revenue from state and local sales and excise taxes reflects a $76 billion or 23% increase in general sales tax revenues and a $31 billion or 19% increase in selective sales tax revenues.
General sales tax revenues
General sales tax revenues increased due to increased consumption of taxable goods and services, and a net increase in unweighted state-level general sales tax rates. Household consumption of most categories of taxable goods and services increased during the period, led by recreation and entertainment ($167 billion or 27% increase)**, food and non-alcoholic beverages away from home ($155 billion or 31%)**, and principal and down payments on cars ($125 billion or 45%)**.38 State-level general sales tax rates increased in seven states by between 0.2 and 1.0 percentage points, while there were decreases in three states of between 0.25 and 1.0 percentage points.39 During the periods presented, local governments also both increased and decreased their sales tax rates.
Selective sales tax revenues
Selective sales tax revenues increased across nearly every major category, led by an $8 billion or 20% increase in tax revenues from motor fuels and a $5 billion or 29% increase in tax revenues from insurance premiums, offset in part by a $1 billion or 4% decrease in tax revenues from public utilities. The increases in selective sales tax revenues are due to changes in both consumption of the selected goods and services and the related tax rates. Unit consumption of motor fuel/oil decreased 21%**40, spending on insurance premiums increased 33%41, and spending on household utilities and fuels increased 9%**38. The unweighted average of gas tax rates across all states increased 32% during this period.39 We are not aware of an aggregated source of data for state and local government tax rates on insurance premiums or household utilities and fuels.
2013 to 2018 | State and local earnings on investments44
State and local earnings on investments increased $61 billion or 16% due to stock market performance as well as a $1,046 billion or 29% increase in investment balances. During these periods, these funds were invested primarily in US corporate equities (57% of funds invested for both periods), corporate and foreign bonds (decreasing from 13% to 12%), mutual funds (increasing from 10% to 11%), and miscellaneous assets (increasing from 5% to 8%). Using state and local fiscal year (July 1 to June 30) starting and ending stock prices to calculate the annual changes, there was a 21% increase in the S&P 500, while there were 50%, 101%, and 1,143% decreases in the FTSE, DAX, and NIKKEI, respectively. During the same period, the US Prime rate increased from 3.5% to 4.1%. Of the overall 29% increase in investment balances, the largest increases were in corporate equities ($582 billion or 49% increase), mutual funds ($155 billion or 43%), and miscellaneous assets ($124 billion or 80%), offset in part by a decrease in mortgage-backed securities ($9 billion or 17%). Miscellaneous assets consist primarily of venture capital, partnerships, and real estate investment trusts (REITs).
2013 to 2018 | State and local other non-tax revenues
The $21 billion or 19% increase in state and local other non-tax revenues primarily relates to miscellaneous general revenue streams, not classified as a tax, including but not limited to recovery of losses charged off in a prior fiscal year, premiums on bonds issued, revenues from sponsorship agreements, recoveries of expenditures made in a prior fiscal year, receipts from escheats and other unclaimed monies, and recorded profits from sale of investments. We are not aware of a government source for revenue from each of these revenue streams.
|
|
2018 |
|
|
2008 |
|
|
Changes 2 |
|||||||||||||||||||||||||||||||||||||
|
(In billions, except percentages) |
Total |
|
Federal |
|
State and Local 1 |
|
Total |
|
Federal |
|
State and Local 1 |
|
Total |
|
Federal |
|
State and Local 1 |
|
Total |
Federal |
State and Local 1 |
|||||||||||||||||||||||
|
Individual income taxes |
$ |
2,109 |
|
|
$ |
1,683 |
|
|
$ |
426 |
|
|
$ |
1,451 |
|
|
$ |
1,146 |
|
|
$ |
305 |
|
|
$ |
658 |
|
|
$ |
537 |
|
|
$ |
121 |
|
|
|
45% |
|
|
47% |
|
|
40% |
|
Payroll taxes |
|
1,189 |
|
|
|
1,189 |
|
|
|
— |
|
|
|
914 |
|
|
|
914 |
|
|
|
— |
|
|
|
275 |
|
|
|
275 |
|
|
|
— |
|
|
|
30% |
|
|
30% |
|
—% |
|
|
Sales and excise taxes |
|
706 |
|
|
|
95 |
|
|
|
611 |
|
|
|
517 |
|
|
|
67 |
|
|
|
450 |
|
|
|
189 |
|
|
|
28 |
|
|
|
161 |
|
|
|
37% |
|
|
42% |
|
|
36% |
|
Property taxes |
|
547 |
|
|
|
— |
|
|
|
547 |
|
|
|
410 |
|
|
|
— |
|
|
|
410 |
|
|
|
137 |
|
|
|
— |
|
|
|
137 |
|
|
|
33% |
|
—% |
|
|
33% |
|
|
Corporate income taxes |
|
261 |
|
|
|
205 |
|
|
|
56 |
|
|
|
362 |
|
|
|
304 |
|
|
|
58 |
|
|
|
(101) |
|
|
|
(99) |
|
|
|
(2) |
|
|
|
(28)% |
|
|
(33)% |
|
|
(3)% |
|
Other taxes |
|
206 |
|
|
|
74 |
|
|
|
132 |
|
|
|
179 |
|
|
|
65 |
|
|
|
114 |
|
|
|
27 |
|
|
|
9 |
|
|
|
18 |
|
|
|
15% |
|
|
14% |
|
|
16% |
|
Tax revenues |
$ |
5,018 |
|
|
$ |
3,246 |
|
|
$ |
1,772 |
|
|
$ |
3,833 |
|
|
$ |
2,496 |
|
|
$ |
1,337 |
|
|
$ |
1,185 |
|
|
$ |
750 |
|
|
$ |
435 |
|
|
|
31% |
|
|
30% |
|
|
33% |
|
Earnings on investments |
$ |
439 |
|
|
$ |
— |
|
|
$ |
439 |
|
|
$ |
(67) |
|
|
$ |
— |
|
|
$ |
(67) |
|
|
$ |
506 |
|
|
$ |
— |
|
|
$ |
506 |
|
|
|
(755)% |
|
—% |
|
|
(755)% |
|
|
Federal Reserve earnings |
|
71 |
|
|
|
71 |
|
|
|
— |
|
|
|
34 |
|
|
|
34 |
|
|
|
— |
|
|
|
37 |
|
|
|
37 |
|
|
|
— |
|
|
|
109% |
|
|
109% |
|
—% |
|
|
Sales of government resources |
|
24 |
|
|
|
11 |
|
|
|
13 |
|
|
|
36 |
|
|
|
20 |
|
|
|
16 |
|
|
|
(12) |
|
|
|
(9) |
|
|
|
(3) |
|
|
|
(33)% |
|
|
(45)% |
|
|
(19)% |
|
Other non-tax revenues |
|
164 |
|
|
|
31 |
|
|
|
133 |
|
|
|
109 |
|
|
|
8 |
|
|
|
101 |
|
|
|
55 |
|
|
|
23 |
|
|
|
32 |
|
|
|
50% |
|
|
288% |
|
|
32% |
|
Total non-tax revenues |
$ |
698 |
|
|
$ |
113 |
|
|
$ |
585 |
|
|
$ |
112 |
|
|
$ |
62 |
|
|
$ |
50 |
|
|
$ |
586 |
|
|
$ |
51 |
|
|
$ |
535 |
|
|
|
523% |
|
|
82% |
|
|
1,070% |
|
Total revenues |
$ |
5,716 |
|
|
$ |
3,359 |
|
|
$ |
2,357 |
|
|
$ |
3,945 |
|
|
$ |
2,558 |
|
|
$ |
1,387 |
|
|
$ |
1,771 |
|
|
$ |
801 |
|
|
$ |
970 |
|
|
|
45% |
|
|
31% |
|
|
70% |
|
Estimated impact of inflation on total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
651 |
|
|
$ |
422 |
|
|
$ |
229 |
|
|
|
16% |
|
|
16% |
|
|
16% |
||||||
|
Estimated impact of population growth on total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
295 |
|
|
|
191 |
|
|
|
104 |
|
|
|
7% |
|
|
7% |
|
|
7% |
|||||||
1 State and local revenue excludes transfers from the federal government. See separate schedule and discussion of intergovernmental transfers at Note 23 – Intergovernmental transfers (Part II, Item 8 within this annual report).
2 Key changes are highlighted in gray in the table above and are discussed in the sections below.
2008 to 2018 | Federal individual income tax revenue
The $537 billion federal individual income tax revenue increase can be attributed $426 billion* to higher individual taxable income and $111 billion* to changes in average tax rates.
Income changes*
The $426 billion increase in revenue attributable to higher taxable income reflected a $3,116 billion or 37% increase in aggregate AGI, offset in part by a $163 billion or 6% increase in aggregate deductions and exemptions. Following are the income components of AGI shown by AGI cohort.
|
|
2018 |
|
|
|
2008 |
|
|
|
Changes |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(In billions, except percentages) |
Wages and Salaries |
|
Capital Gains |
|
Partnership and S-Corp |
|
All Other1 |
|
Total AGI |
|
|
|
Wages and Salaries |
|
Capital Gains |
|
Partnership and S-Corp |
|
All Other1 |
|
Total AGI |
|
|
|
Wages and Salaries |
|
Capital Gains |
|
Partnership and S-Corp |
|
All Other1 |
|
Total AGI |
|
Wages and Salaries |
|
Capital Gains |
Partnership and S-Corp |
All Other1 |
Total AGI |
|||||||||||||||||||||||||||
|
Less than $1 |
$ |
22 |
|
$ |
17 |
|
$ |
(53) |
|
$ |
(197) |
|
$ |
(211) |
|
|
|
$ |
23 |
|
$ |
15 |
|
$ |
(82) |
|
$ |
(106) |
|
$ |
(150) |
|
|
|
$ |
(1) |
|
$ |
2 |
|
$ |
29 |
|
$ |
(91) |
|
$ |
(61) |
|
|
(4)% |
|
13% |
|
35% |
|
(86)% |
(41)% |
|||||||||
|
$1-$50K |
|
1,598 |
|
|
11 |
|
|
7 |
|
|
348 |
|
|
1,964 |
|
|
|
|
1,564 |
|
|
5 |
|
|
2 |
|
|
360 |
|
|
1,931 |
|
|
|
|
34 |
|
|
6 |
|
|
5 |
|
|
(12) |
|
|
33 |
|
|
2% |
|
120% |
250% |
|
(3)% |
2% |
||||||||||
|
$50,001-$75K |
|
1,022 |
|
|
12 |
|
|
10 |
|
|
269 |
|
|
1,313 |
|
|
|
|
936 |
|
|
8 |
|
|
8 |
|
|
232 |
|
|
1,184 |
|
|
|
|
86 |
|
|
4 |
|
|
2 |
|
|
37 |
|
|
129 |
|
|
9% |
|
50% |
|
25% |
16% |
11% |
||||||||||
|
$75,001-$100K |
|
882 |
|
|
17 |
|
|
13 |
|
|
270 |
|
|
1,182 |
|
|
|
|
792 |
|
|
10 |
|
|
10 |
|
|
202 |
|
|
1,014 |
|
|
|
|
90 |
|
|
7 |
|
|
3 |
|
|
68 |
|
|
168 |
|
|
11% |
|
70% |
30% |
|
34% |
17% |
||||||||||
|
$100,001-$200K |
|
2,092 |
|
|
67 |
|
|
61 |
|
|
616 |
|
|
2,836 |
|
|
|
|
1,407 |
|
|
36 |
|
|
42 |
|
|
347 |
|
|
1,832 |
|
|
|
|
685 |
|
|
31 |
|
|
19 |
|
|
269 |
|
|
1,004 |
|
|
49% |
|
86% |
|
45% |
|
78% |
55% |
|||||||||
|
$200,001-$500K |
|
1,292 |
|
|
118 |
|
|
146 |
|
|
365 |
|
|
1,921 |
|
|
|
|
652 |
|
|
61 |
|
|
90 |
|
|
193 |
|
|
996 |
|
|
|
|
640 |
|
|
57 |
|
|
56 |
|
|
172 |
|
|
925 |
|
|
98% |
|
93% |
|
62% |
|
89% |
93% |
|||||||||
|
$500,001-$1 million |
|
406 |
|
|
86 |
|
|
124 |
|
|
114 |
|
|
730 |
|
|
|
|
210 |
|
|
50 |
|
|
76 |
|
|
69 |
|
|
405 |
|
|
|
|
196 |
|
|
36 |
|
|
48 |
|
|
45 |
|
|
325 |
|
|
93% |
|
72% |
|
63% |
|
65% |
80% |
|||||||||
|
Over $1 million |
|
511 |
|
|
567 |
|
|
375 |
|
|
297 |
|
|
1,750 |
|
|
|
|
340 |
|
|
389 |
|
|
233 |
|
|
195 |
|
|
1,157 |
|
|
|
|
171 |
|
|
178 |
|
|
142 |
|
|
102 |
|
|
593 |
|
|
50% |
|
46% |
|
61% |
|
52% |
51% |
|||||||||
|
Total |
$ |
7,825 |
|
$ |
895 |
|
$ |
683 |
|
$ |
2,082 |
|
$ |
11,485 |
|
|
|
$ |
5,924 |
|
$ |
574 |
|
$ |
379 |
|
$ |
1,492 |
|
$ |
8,369 |
|
|
|
$ |
1,901 |
|
$ |
321 |
|
$ |
304 |
|
$ |
590 |
|
$ |
3,116 |
|
|
32% |
|
56% |
|
80% |
|
40% |
37% |
|||||||||
1 See prior federal AGI tables for the definition of All Other.
AGI by cohort
AGI increased for nearly all income cohorts, most significantly for the cohorts with AGI above $100,000, a group which saw its aggregate AGI increase over $2,847 billion or 65%. The cohort with the largest dollar increase in AGI is the one with AGI between $100,001 and $200,000, at an increase of $1,004 billion or 55%, driven primarily by higher wages and salaries but with increases across all sources of income. The cohort with the largest percentage increase in AGI is the one with AGI between $200,001 and $500,000, at an increase of 93% or $925 billion, driven primarily by higher wages and salaries but with increases across all sources of income. The increases in AGI for these cohorts were offset in part by a $61 billion or 41% decrease in AGI for the cohort where AGI is less than $1, driven primarily by a decrease in All Other income.
AGI by income type
Over 60% of the $3,116 billion increase in AGI was driven by higher wages and salaries, which increased $1,901 billion or 32%. Nearly all AGI cohorts saw wage and salary growth. The largest dollar amount of wage and salary growth, at an increase of $685 billion or 49%, was for the cohort with AGI between $100,001 and $200,000. The highest rate of growth, at 98% or $640 billion, was for the cohort with AGI between $200,001 and $500,000.
Net capital gains income, making up just over 10% of the overall change in AGI, increased $321 billion or 56%. All AGI cohorts saw an increase in net capital gains income. The largest dollar amount of increase, at $178 billion or 46%, was for the cohort with AGI over $1 million. The highest rate of increase, at 120% or $6 billion, was for the cohort with AGI between $1 and $50,000. The average daily closing price of the S&P 500 between these federal fiscal years (October 1 to September 30) increased 99%, which may have contributed to increases in capital gains.
Partnership and S-Corporation income increased $304 billion or 80%, comprising just under 10% of the overall increase in AGI. More than 80% of the increase was for the top three cohorts, where AGI is above $200,000, a group which saw an aggregate increase in Partnership and S-Corporation income of $246 billion or 62%. The highest rate of growth, at 250% or $5 billion, was for the cohort with AGI between $1 and $50,000.
Income within the “All Other” category shown in the table above increased $590 billion or 40%, comprising 19% of the overall increase in AGI. This increase was driven primarily by a $571 billion or 69% increase in taxable retirement income, with IRA, pension, and annuity income comprising 72% of the total change. By income type and cohort, the largest dollar amount of growth in taxable retirement income, at an increase of $261 billion or 127%, was for the cohort with AGI between $100,001 and $200,000. The highest rate of taxable retirement income growth, at 197% or $132 billion, was for the cohort with AGI between $200,001 and $500,000. During this period, the population of those aged 65 years and older, the cohort most likely to be taking retirement income distributions, increased 34%.
AGI mobility – numbers of income tax returns filed by income cohort
|
((In thousands, except percentages) |
|
2018 |
|
|
|
|
|
2008 |
|
|
|
|
Changes |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than $1 |
|
1,980 |
|
|
|
|
|
2,345 |
|
|
|
|
|
(365) |
|
|
(16)% |
|
$1-$50K |
|
87,408 |
|
|
|
|
|
91,076 |
|
|
|
|
|
(3,668) |
|
|
(4)% |
|
$50,001-$75K |
|
21,335 |
|
|
|
|
|
19,260 |
|
|
|
|
|
2,075 |
|
|
11% |
|
$75,001-$100K |
|
13,641 |
|
|
|
|
|
11,733 |
|
|
|
|
|
1,908 |
|
|
16% |
|
$100,001-$200K |
|
20,848 |
|
|
|
|
|
13,753 |
|
|
|
|
|
7,095 |
|
|
52% |
|
$200,001-$500K |
|
6,733 |
|
|
|
|
|
3,481 |
|
|
|
|
|
3,252 |
|
|
93% |
|
$500,001-$1 million |
|
1,084 |
|
|
|
|
|
596 |
|
|
|
|
|
488 |
|
|
82% |
|
Over $1 million |
|
528 |
|
|
|
|
|
339 |
|
|
|
|
|
189 |
|
|
56% |
|
Total |
|
153,557 |
|
|
|
|
|
142,583 |
|
|
|
|
|
10,974 |
|
|
8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The number of income tax returns filed for the lowest income cohorts, those with AGI of $50,000 or less, decreased by more than 4.0 million tax returns in aggregate, while the number of tax returns filed increased for all other AGI cohorts. The group with the highest increase in number of returns filed was the cohort with AGI between $100,001 and $200,000, at an increase of nearly 7.1 million returns, while the group with the highest percentage increase in the number of returns filed was the cohort with AGI between $200,001 and $500,000, at an increase of 93%.
Deductions and exemptions
|
|
2018 |
|
|
|
2008 |
|
|
|
Changes |
||||||||||||||||||||||||||||||||||||||||||||||||||
|
(In billions, except percentages) |
Itemized Deductions |
|
Standard Deductions |
|
Exemptions |
|
Limitations1 |
|
Total Deductions/ Exemptions |
|
|
|
Itemized Deductions |
|
Standard Deductions |
|
Exemptions |
|
Limitations1 |
|
Total Deductions/ Exemptions |
|
|
|
Itemized Deductions |
|
Standard Deductions |
|
Exemptions |
|
Limitations1 |
|
Total Deductions/ Exemptions |
|
Itemized Deductions |
|
Standard Deductions |
Exemptions |
Limitations1 |
Total Deductions/ Exemptions |
|||||||||||||||||||
|
Less than $1 |
$ |
— |
|
$ |
— |
|
$ |
2 |
|
$ |
(213) |
|
$ |
(211) |
|
|
|
$ |
— |
|
$ |
— |
|
$ |
14 |
|
$ |
(164) |
|
$ |
(150) |
|
|
|
$ |
— |
|
$ |
— |
|
$ |
(12) |
|
$ |
(49) |
|
$ |
(61) |
|
|
—% |
|
—% |
|
(86)% |
|
(30)% |
41% |
|
|
$1-$50K |
|
85 |
|
|
1,078 |
|
|
143 |
|
|
(162) |
|
|
1,144 |
|
|
|
|
232 |
|
|
537 |
|
|
529 |
|
|
(189) |
|
|
1,109 |
|
|
|
|
(147) |
|
|
541 |
|
|
(386) |
|
|
27 |
|
|
35 |
|
|
(63)% |
|
101% |
73% |
|
14% |
3% |
||
|
$50,001-$75K |
|
79 |
|
|
292 |
|
|
44 |
|
|
7 |
|
|
422 |
|
|
|
|
194 |
|
|
87 |
|
|
155 |
|
|
(4) |
|
|
432 |
|
|
|
|
(115) |
|
|
205 |
|
|
(111) |
|
|
11 |
|
|
(10) |
|
|
(59)% |
|
236% |
|
72% |
275% |
(2)% |
||
|
$75,001-$100K |
|
83 |
|
|
195 |
|
|
32 |
|
|
6 |
|
|
316 |
|
|
|
|
181 |
|
|
38 |
|
|
106 |
|
|
— |
|
|
325 |
|
|
|
|
(98) |
|
|
157 |
|
|
(74) |
|
|
6 |
|
|
(9) |
|
|
(54)% |
|
413% |
70% |
|
100% |
(3)% |
||
|
$100,001-$200K |
|
229 |
|
|
278 |
|
|
53 |
|
|
21 |
|
|
581 |
|
|
|
|
345 |
|
|
21 |
|
|
134 |
|
|
(2) |
|
|
498 |
|
|
|
|
(116) |
|
|
257 |
|
|
(81) |
|
|
23 |
|
|
83 |
|
|
(34)% |
|
1,224% |
|
60% |
|
1,150% |
17% |
|
|
$200,001-$500K |
|
161 |
|
|
64 |
|
|
15 |
|
|
26 |
|
|
266 |
|
|
|
|
170 |
|
|
2 |
|
|
29 |
|
|
(2) |
|
|
199 |
|
|
|
|
(9) |
|
|
62 |
|
|
(14) |
|
|
28 |
|
|
67 |
|
|
(5)% |
|
3,100% |
|
(48)% |
|
1,400% |
34% |
|
|
$500,001-$1 million |
|
54 |
|
|
7 |
|
|
— |
|
|
11 |
|
|
72 |
|
|
|
|
57 |
|
|
— |
|
|
3 |
|
|
(1) |
|
|
59 |
|
|
|
|
(3) |
|
|
7 |
|
|
(3) |
|
|
12 |
|
|
13 |
|
|
(5)% |
|
100% |
|
(100)% |
|
1,200% |
22% |
|
|
Over $1 million |
|
146 |
|
|
2 |
|
|
— |
|
|
39 |
|
|
187 |
|
|
|
|
146 |
|
|
— |
|
|
2 |
|
|
(6) |
|
|
142 |
|
|
|
|
— |
|
|
2 |
|
|
(2) |
|
|
45 |
|
|
45 |
|
|
—% |
|
100% |
|
(100)% |
|
750% |
32% |
|
|
Total |
$ |
837 |
|
$ |
1,916 |
|
$ |
289 |
|
$ |
(265) |
|
$ |
2,777 |
|
|
|
$ |
1,325 |
|
$ |
685 |
|
$ |
972 |
|
$ |
(368) |
|
$ |
2,614 |
|
|
|
$ |
(488) |
|
$ |
1,231 |
|
$ |
(683) |
|
$ |
103 |
|
$ |
163 |
|
|
(37)% |
|
180% |
|
(70)% |
|
28% |
6% |
|
1 Limitations represents the effect of limiting taxable income to no less than zero. If the combination of deductions and exemptions exceeds AGI, the excess deductions and exemptions are disallowed.
The $63 billion increase in net deductions and exemptions during this period was impacted significantly by the shift in mix of deductions and exemptions discussed in the 2017 to 2018 comparison above, presumably driven by the TCJA. As we are unable to isolate the impact of the TCJA, we have excluded the 2017 to 2018 comparison here (see above for that analysis) and instead compare 2008 to 2017 in this section. Excluding the change from 2017 to 2018, the change in total deductions/exemptions in the table above would be a $361 billion increase instead of a $163 billion increase. Most of the adjusted $361 billion increase was for standard deductions and exemptions, which increased $218 billion or 32% and $181 billion or 19%, respectively. Itemized deductions increased $40 billion or 4%. Cohorts with AGI of $100,000 or less experienced at least a partial shift from itemized deductions to standard deductions, whereas cohorts with AGI of $100,001 or greater experienced increases in both itemized and standardized deductions. Changes in limitations varied amongst the cohorts with no discernable pattern.
Tax rate changes
Key changes in statutory federal individual income tax rates during this period were the same as those discussed above under Fiscal year 2018 compared with fiscal year 2013.
2008 to 2018 | Payroll tax revenue
The $275 billion increase in payroll tax revenue primarily reflected a $202 billion or 30% increase in Social Security tax revenues, as well as a $67 billion or 34% increase in Medicare tax revenues.
Social Security payroll tax revenues
The $202 billion increase in Social Security tax revenues primarily reflects a $229 billion* increase attributable to higher taxable income, driven by a $1,826 billion* or 34%* increase in earnings subject to Social Security taxes. The overall Social Security tax rate (employee and employer combined) was 12.4% in each year.
Medicare payroll tax revenues
The $67 billion increase in Medicare tax revenues primarily reflects a $67 billion* increase attributable to higher taxable income, driven by a $2,273 billion* or 34%* increase in earnings subject to Medicare taxes.
The overall base Medicare tax rate (employee and employer combined) was 2.9% in each year. Beginning in calendar year 2013, however, individuals paid an additional 0.9% (on top of the base 2.9%) Medicare tax on their wages, compensation, or self-employment income exceeding $200,000 for single filers ($250,000 for married filing jointly, $125,000 for married filing separately).
2008 to 2018 | State and local sales and excise taxes
The $161 billion growth in revenue from state and local sales and excise taxes reflects a $106 billion or 35% increase in general sales tax revenues and a $55 billion or 38% increase in selective sales tax revenues.
General sales tax revenues
General sales tax revenues increased due to increased consumption of taxable goods and services, and a net increase in unweighted state-level general sales tax rates. Household consumption of most categories of taxable goods and services increased during the period, led by: food and non-alcoholic beverages away from home ($224 billion or 52% increase)**; recreation and entertainment ($192 billion or 32%); technology ($139 billion or 29%); and household supplies, jewelry, and personal care ($126 billion or 32%).38 State-level general sales tax rates increased in 16 states by between 0.12 and 1.3 percentage points, while there was a decrease in one state of 0.38 percentage points.39 During the periods presented, local governments also both increased and decreased their sales tax rates.
Selective sales tax revenues
Selective sales tax revenues increased across nearly every major category, led by an $11 billion or 28% increase in tax revenues from motor fuels and a $7 billion or 42% increase in tax revenues from insurance premiums, offset in part by a $1 billion or 2% decrease in tax revenues from public utilities. The increases in selective sales tax revenues are due to changes in both consumption of the selected goods and services and the related tax rates. Unit consumption of motor fuel/oil decreased 8%40, spending on insurance premiums increased 47%41, and spending on household utilities and fuels increased 13%.38 The unweighted average of gas tax rates across all states increased 38% during this period.39 We are not aware of an aggregated source of data for state and local government tax rates on insurance premiums or household utilities and fuels.
2008 to 2018 | State and local earnings on investments44
State and local earnings on investments increased $506 billion or 755% due to a $1,197 billion or 35% increase in investment balances, offset in part by a decrease in stock market performance. During these periods, these funds were invested primarily in US corporate equities (increasing from 51% to 57% of funds invested), corporate and foreign bonds (decreasing from 13% to 12%), mutual funds (decreasing from 14% to 11%), and miscellaneous assets (increasing from 4% to 8%). Using state and local fiscal year (July 1 to June 30) starting and ending stock prices to calculate the annual changes, there was a 946% increase in the annual change in the NIKKEI, while there were decreases of 99%, 133%, and 232%, in the annual change in the DAX, FTSE, and S&P 500, respectively. Of the overall 35% increase in investment balances, the largest increases were in corporate equities ($868 billion or 49% increase), miscellaneous assets ($138 billion or 97%), and Treasury securities ($135 billion or 95%), offset in part by a decrease in agency- and GSE-backed securities ($97 billion or 49%) and mortgage-backed securities ($14 billion or 83%). Miscellaneous assets consist primarily of venture capital, partnerships, and REITs.