After Pandemic Relief Ended, CBO Shows Federal Taxes Remained Progressive in 2022

Why It Matters

The findings confirm that higher‑income households continue to shoulder the bulk of federal revenue, shaping debates on tax reform and fiscal sustainability. Policymakers must consider the progressive tilt when designing future tax or transfer policies.

Key Takeaways

• CBO: federal taxes remained progressive in 2022 despite pandemic relief ending
• Bottom 20% earned a negative effective tax rate of –10.1% in 2022
• Top 1% contributed 27.3% of all federal taxes, up from 14% in 1980s
• Payroll taxes are mildly regressive, ranging 9.5% to 6.1% across quintiles
• Income growth for top earners outpaced lower quintiles since 1979

Pulse Analysis

The CBO’s latest distribution analysis underscores a tax system that still leans heavily on high‑income earners. While the bottom quintile enjoys refundable credits that push its effective federal income tax rate into negative territory, the top 20% faces rates above 16%, and the top 1% shoulders more than a quarter of total federal tax receipts. This concentration reflects both the progressive structure of the income‑tax code and the growing share of income captured by the wealthiest households over the past four decades.

The post‑pandemic landscape reveals how temporary relief measures distorted tax burdens. In 2020 and 2021, expansive stimulus payments and an expanded child tax credit drove the effective tax rate for low‑income families to historic lows of –16.5% and –22.5%. With those programs expired, the bottom 60% of taxpayers now pay 12.8% of federal taxes, a rebound toward pre‑pandemic levels. Meanwhile, payroll and excise taxes remain relatively flat across income groups, offering limited offset to the progressive income‑tax component.

For policymakers, the data present a clear trade‑off. Any proposal to raise revenue by expanding taxes on middle‑class wages will confront a system already extracting a modest share from that cohort, while further taxing the affluent could yield disproportionate revenue gains. Understanding the nuanced interplay between income growth, tax progressivity, and transfer policies is essential for crafting reforms that balance equity, efficiency, and fiscal needs.