By using this site, you agree to our Privacy Policy and our Terms of Use. Close

The U.S income tax is pretty progressive. 

A median head of household in my state makes about $38,000 USD. 

They'd be taxed at 10%*$9,950 + 12%*($38,000 - $9,950) = $4,361 per year federally if there were no deductions. That only puts them in the second marginal bracket. There are five brackets above that, and you need to make more than $523,601 to be in the top bracket (37% of income.) Basically there are people in the 1% of all income-earners who don't reach the top bracket. That is before deductions.

The standard deduction is up to $12,000, so really it is more like $38,000 - $12,000 = $26,000 taxable income. Then 10%*$9,950 + ($26,000- 9,950)*12% =  $2,921. 

However, there are also some tax credits like the Lifetime Learning Credit or Earned Income Tax Credit that people take advantage of. So lets say you are a single-income head of household member with a spouse and a child and make that income. You'd qualify for the EITC and be able to get a negative income tax of about $2,921 - $3,618 = - $697. That means the Federal government owes you $697.  

On the other-hand, the state income tax is a flat (3.07 %) and local earned-income taxes average about 1.5% in Pennsylvania. Payroll taxes are also regressive (6.2% up to $147,000, 0% after $147,000; + 1.45% flat.) 

So basically the median head of household earner in Pennsylvania with one child and one spouse pays about $1,166 (Pennsylvania State Income Tax) + $570 (Local Income Taxes) + $2,907 (FICA -- Federal Payroll Tax) - $697 (EITC owed to family from federal government) = $3,946 per year. Or an effective tax rate of 10.4%. 

Of course, you need to consider that the payroll tax estimate doesn't include health-insurance costs (including premiums, deductible, copays), which could be another 19% of income for a family. So it roughly balances out compared to European countries when you account for healthcare. 

This doesn't include property/land value, sales taxes or capital gains, because I wanted to keep thinks relatively simple.  


Actually I used the individual income brackets, but a head of household has even more generous brackets and would pay even less tax than I calculated.  

$1465 + ($26000-14650)*.12 = $2827. After EITC that would be $2,827 - $3,618 = -$791 the federal government owes the head of household. 

Last edited by sc94597 - on 30 May 2022