US Federal Average Marginal Income Tax Rates


in the NBER TAXSIM model
Year Wages Interest
Received 		Dividends LT Gain Mortage
Interest
Paid 		Pensions
1960 0.210 na 0.478 na na na
1961 na na na na na na
1962 0.242 0.370 0.525 na na na
1963 na na na na na na
1964 0.176 0.228 0.446 0.217 -0.170 na
1965 na na na na na na
1966 0.202 0.258 0.446 0.221 -0.213 na
1967 0.180 0.214 0.406 0.202 na na
1968 0.189 0.225 0.413 0.211 -0.190 na
1969 0.195 0.227 0.380 0.207 na na
1970 0.202 0.233 0.378 0.184 -0.201 na
1971 0.203 0.242 0.387 0.194 na na
1972 0.207 0.245 0.383 0.194 -0.209 0.178
1973 0.228 0.261 0.398 0.187 -0.235 0.191
1974 0.239 0.278 0.415 0.185 na 0.209
1975 0.230 0.249 0.379 0.141 -0.228 0.212
1976 0.245 0.263 0.402 0.156 -0.246 0.213
1977 0.281 0.289 0.446 0.213 0.000 0.226
1978 0.264 0.280 0.391 0.171 0.000 0.232
1979 0.287 0.301 0.440 0.170 0.000 0.235
1980 0.306 0.320 0.440 0.178 -0.304 0.264
1981 0.303 0.309 0.404 0.171 -0.296 0.268
1982 0.287 0.267 0.341 0.149 -0.276 na
1983 0.251 0.222 0.246 0.094 -0.240 na
1984 0.265 0.267 0.331 0.151 -0.257 na
1985 0.267 0.265 0.326 0.155 -0.260 na
1986 0.270 0.258 0.324 0.162 -0.264 na
1987 0.251 0.244 0.324 0.244 -0.259 0.226
1988 0.233 0.232 0.260 0.268 0.000 0.215
1989 0.230 0.230 0.255 0.259 -0.233 0.213
1990 0.230 0.230 0.252 0.253 -0.230 0.210
1991 0.228 0.227 0.255 0.243 -0.226 0.208
1992 0.229 0.223 0.255 0.249 -0.225 0.207
1993 0.234 0.235 0.272 0.253 -0.224 0.206
1994 0.238 0.241 0.270 0.256 -0.227 0.208

source: http://www.nber.org/~taxsim/mrates

Notes:

These are dollar weighted average marginal income tax rates for the US Individual Income Tax as calculated by the NBER TAXSIM model from micro data.

They are calculated by first calculating the tax liability of each return, then increasing (in turn) each income type by 1% and recalculating the tax liability under the assumption that other incomes and expenses are constant. The difference in aggregate tax divided by the difference in aggregate income is the marginal tax rate on the average dollar of that income type.

The rates take account of most features of the tax code including the maximum tax, minimum tax, alternative taxes, partial inclusion of social security, earned income credit, phaseouts of the standard deduction and lowest bracket rate, etc.

Only positive long term capital gains are used in the calculation of the tax rate on long term gains. For years when any income item is not broken out in the data the tax rate is shown as ``na''. The subsidy for mortgage interest deductions is shown as a negative tax. Pension income includes both fully and partially taxable pension income.

Differences in marginal rates reflect both differences in the tax treatment of different types of income and differences in the functional distribution of income. These ``dollar weighted'' marginal rates are typically higher than ``person weighted'' tax rates would be, but are more appropriate for most analysis of changes in the tax structure.

The micro data are from the Individual Income Tax Models available from the Statistics of Income Division of the Internal Revenue Service. Sample sizes range from 80,000 to 200,000 actual tax returns, with weighted oversampling of high income returns. There was no Tax Model in 1961, 1963 or 1965.

Please cite as Feenberg, Daniel, and Elizabeth Coutts,''An Introduction to the Taxsim Model'' Journal of Policy Analysis and Management Vol 12, Number 1, Winter 1993, and this web site (http://www.nber.org/~taxsim).

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NBER home page Last revision date 7 December 1998.