Personal Finance Taxes Tax Software
Written by Liz Knueven; edited by Richard Richtmyer
2023-03-01T01:15:57Z
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- The average federal income tax payment in 2020 was $16,615, according to the most recent data available from the IRS.
- However, that figure is an average, and is more than what most Americans actually pay each year.
- Americans in the most common tax bracket paid an average income tax of $4,567 for the 2020 tax year.
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Among the more than 164 million Americans who filed tax returns in 2020, the average federal income tax payment was $16,615, according to the most recent Internal Revenue Service data.
Taxes are determined in part as a percentage of income, graduated based on income level and filing status. For most people, deductions and credits also play a role in how much they pay.
As a result, the $16,615 figure isn't representative of the amount a typical American actually pays. As an average, it is skewed by outliers, including about 27,000 returns of people who paid income tax on more than $10 million in 2020, for example.
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TurboTax
On TurboTax's website
Insider’s Rating
4.2/5
Perks
Offers a high-quality user interface and access to experts and is especially valuable for self-employed filers who use QuickBooks integration.
Fees
$0 for Free Edition, $69 for Deluxe, $129 for Premium
Pros
- Can be good for relatively complex tax situations that may require help navigating deductions and forms
- Offers step-by-step guidance
- Ability to upgrade for instant access to an expert
Cons
- Not all users will qualify for a $0 filing option
- Most expensive option for many tax situations
- No brick-and-mortar locations to meet with a tax pro
Insider’s Take
TurboTax is among the most expensive options for filing taxes online, but offers a high-quality user interface and access to experts. It's especially valuable for self-employed filers who use QuickBooks integration.
TurboTax Tax Software review External link Arrow An arrow icon, indicating this redirects the user."
Product Details
- Tell TurboTax about your life and it will guide you step by step. Jumpstart your taxes with last year’s info.
- Snap a photo of your W-2 or 1099-NEC and TurboTax will put your info in the right places.
- CompleteCheck™ scans your return so you can be confident it’s 100% accurate.
- You won’t pay for TurboTax until it’s time to file and you’re fully satisfied.
- TurboTax is committed to getting you your maximum refund, guaranteed.
The average American's federal income tax by income level
In general, the amount of tax paid increases with the amount of adjusted gross income, which is the amount that's taxable after accounting for whatever deductions and credits you qualify for. Here's how much income tax Americans paid in 2020 by income level, along with the number of returns filed within each income level, according to data compiled by the IRS Statistics of Income Division.
| Adjusted gross income | Average total income tax | Number of returns filed |
$1 under $5,000 | $159 | 10,356,651 |
$5,000 under $10,000 | $497 | 10,107,828 |
$10,000 under $15,000 | $196 | 10,580,466 |
$15,000 under $20,000 | $456 | 10,023,674 |
$20,000 under $25,000 | $901 | 9,725,840 |
$25,000 under $30,000 | $1,305 | 9,515,795 |
$30,000 under $40,000 | $1,936 | 16,776,306 |
$40,000 under $50,000 | $2,767 | 13,154,096 |
$50,000 under $75,000 | $4,567 | 22,602,996 |
$75,000 under $100,000 | $7,363 | 14,379,692 |
$100,000 under $200,000 | $15,093 | 22,415,415 |
$200,000 under $500,000 | $48,264 | 7,615,358 |
$500,000 under $1,000,000 | $157,578 | 1,237,975 |
$1,000,000 under $1,500,000 | $318,655 | 272,680 |
$1,500,000 under $2,000,000 | $474,805 | 108,913 |
$2,000,000 under $5,000,000 | $835,025 | 157,974 |
$5,000,000 under $10,000,000 | $1,920,578 | 40,567 |
$10,000,000 or more | $7,914,363 | 26,576 |
All income levels, total | $16,615 | 164,358,792 |
The IRS defines AGI as any wages earned, capital gains, taxable retirement account disbursem*nts, business income, or any other income. This figure also includes adjustments to income that lower a person's taxable income, like deductions for student loan interest paid, contributions to some retirement accounts, health savings account contributions, and more.
The most common adjusted gross income in the US fell between $50,000 and $75,000 in 2020. Within this income segment, the average annual income tax paid was $4,567.
This data only includes federal income taxes paid to the IRS. It does not account for other types of taxes typically owed, like state income tax, or property taxes.
TurboTax
On TurboTax's website
Insider’s Rating
4.2/5
Perks
Offers a high-quality user interface and access to experts and is especially valuable for self-employed filers who use QuickBooks integration.
Fees
$0 for Free Edition, $69 for Deluxe, $129 for Premium
Pros
- Can be good for relatively complex tax situations that may require help navigating deductions and forms
- Offers step-by-step guidance
- Ability to upgrade for instant access to an expert
Cons
- Not all users will qualify for a $0 filing option
- Most expensive option for many tax situations
- No brick-and-mortar locations to meet with a tax pro
Insider’s Take
TurboTax is among the most expensive options for filing taxes online, but offers a high-quality user interface and access to experts. It's especially valuable for self-employed filers who use QuickBooks integration.
TurboTax Tax Software review External link Arrow An arrow icon, indicating this redirects the user."
Product Details
- Tell TurboTax about your life and it will guide you step by step. Jumpstart your taxes with last year’s info.
- Snap a photo of your W-2 or 1099-NEC and TurboTax will put your info in the right places.
- CompleteCheck™ scans your return so you can be confident it’s 100% accurate.
- You won’t pay for TurboTax until it’s time to file and you’re fully satisfied.
- TurboTax is committed to getting you your maximum refund, guaranteed.
Personal Finance Reporter
Liz was a personal finance reporter at Insider. Before joining Insider, she wrote about financial and automotive topics as a freelancer for brands like LendingTree and Credit Karma. She earned her bachelor's degree in writing from The Savannah College of Art and Design. She lives and works in Cincinnati, Ohio. Find her on Twitter at @lizknueven.
Editorial Note: Any opinions, analyses, reviews, or recommendations expressed in this article are the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any card issuer. Read our editorial standards.
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