While no one enjoys paying taxes, most Americans understand their value. We collectively fund everything from our public school system and national parks to the physical infrastructure we rely on daily. We also support those in need, such as those rebuilding after natural disasters. To most, it feels right to pay one’s fair share for a better society. But what exactly is a “fair share,” and who is actually paying it?
Debunking a Common Tax Myth
A frequently repeated “fact” is that the wealthiest 1% of Americans pay more in taxes than the bottom 90% combined. This can create the impression of an unfair burden on a small group. However, a closer look at the data reveals a more nuanced picture.
According to a recent analysis, while the top 1% of earners pay a significant share of federal income taxes, it’s because they also earn a significant share of the national income. In 2025, the top 1% of earners are projected to earn approximately 22% of all income, and they pay roughly 42% of all federal income taxes. This is a far cry from 90% and demonstrates that the federal income tax system is, by design, progressive.
The Full Tax Picture: Beyond Income Tax
The biggest tax most people pay is not income tax—it’s payroll taxes. This includes the FICA tax, which funds Social Security and Medicare.
Payroll taxes are considered regressive because of the Social Security wage cap. For 2025, FICA taxes are paid on the first $170,000 of earned income. This means that a person earning $60,000 pays FICA taxes on 100% of their income, while an individual earning $1,000,000 pays on only a fraction of their income. This structure means that a higher percentage of a middle-class worker’s income goes toward these programs than a high-income earner’s.
A More Balanced View of the Tax Burden
When you combine all taxes—federal, state, local, income, and payroll—the picture of who pays what becomes clearer. The Institute on Taxation and Economic Policy (ITEP) has analyzed the total tax burden by income group. The data shows:
- The highest 20% of earners earn approximately 62% of all income and pay a total of 66.4% of all taxes.
- The highest 15% of earners make about 25.5% of all income and pay 26% of all taxes.
- The top 1% of earners make about 21% of all income and pay 24.1% of all taxes.
While the tax system remains progressive, particularly at the federal income tax level, a more comprehensive view reveals that the tax burden is more evenly distributed across income groups than is commonly believed, largely due to the impact of payroll and other regressive taxes.