Last year, 57% of American households did not pay federal income tax, according to a new report from the nonpartisan Tax Policy Center.
That marks a huge jump from 2020 when 44% of U.S. households did not pay any federal income tax. Howard Gleckman, a senior fellow at the Tax Policy Center, said that the increase was due to job losses related to the coronavirus pandemic, decreased income, stimulus checks, and tax credits, such as the expanded Child Tax Credit.
Gleckman explained that the tax credit reduced "the income tax liability of more than a hundred million households and temporarily turned many from payers of small amounts of federal income tax to non-payers."
Federal income taxes are just one part of the overall tax burden. In addition to local and state taxes, most workers still pay payroll taxes. According to CNBC, only 19% of U.S. households did not pay payroll taxes or federal income taxes in 2021.
While there have been multiple reports about wealthy individuals paying little or no federal income tax, Gleckman said that most people who don't pay federal income taxes are those with lower incomes.
"The tax code is actually quite progressive," Gleckman said. "There may be some cases where someone with a lot of wealth has little income, or they realize gains and offset those with losses or a charitable deduction. But that's unusual."