One of the simplest ways to think about the US standard of living is to consider how much people earn in income, pay in taxes, and receive in government transfers. A government transfer can be cash, or non-cash in the form of services like Medicaid and Medicare.
In 2021, the average American family in the middle 20% of income earners paid $17,902 in taxes to federal, state, and local governments. This includes direct taxes, such as income taxes, as well as indirect taxes, like payroll taxes. Of all the taxes the middle 20% paid in 2021, $10,391 went to federal income tax.
What is the average family market income?
Meanwhile, the same family in the middle 20% earned $59,757 from market sources, including from dividends and capital gains. To make it into the middle 20% of families in 2021, a family would have to earn between $41,900 and $80,000.
What does the average family get in government transfers?
In 2021, the average middle 20% family received $30,033 in transfers from the government, including supplemental security income and other cash, and non-cash transfers, such as Medicaid and Medicare. The second 20%, however, received the most from the federal government: $37,330.
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