Average Income Tends to Rise with Age

A commonly overlooked reason for the difference in income levels among taxpayers is the life cycle issue. As we mature and gain work experience, our incomes tend to rise; income typically peaks when we near retirement. Viewing annual Internal Revenue Service data only provides a snapshot of a taxpayer’s situation rather than a fuller picture of their well-being—the life cycle of income is important context for income inequality discussions. The chart below illustrates Internal Revenue Service (IRS) data from tax returns filed for the 2016 tax year. Taxpayers nearest to retirement, ages 55 under 65, reported average adjusted gross income (AGI) of $99,836. Compared to the average AGI for all taxpayers of $69,317 and the average of $18,798 of the 18 under 26 age group, we can see that incomes tend to rise as taxpayers grow older and more experienced. Stay Informed on Tax Policy Research and Analysis Select…

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