About 1 million taxpayers will automatically receive special payments of up to $1,400 from the IRS in the coming weeks. The money will be directly deposited into eligible people's bank accounts or sent in the mail by a paper check.
The IRS said it's distributing about $2.4 billion to taxpayers who failed to claim a Recovery Rebate Credit on their 2021 tax returns. People who missed one of the COVID stimulus payments or received less than the full amount were able to claim the credit. But the IRS on Friday said it discovered many eligible taxpayers hadn't done so.
The Internal Revenue Service (IRS) headquarters building is located in Washington, D.C.
“Looking at our internal data, we realized that one million taxpayers overlooked claiming this complex credit when they were actually eligible,†IRS Commissioner Danny Werfel said in a statement.
Here's more about the unexpected cash this group of taxpayers will soon receive:
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What's the likelihood I'll receive a check?
Sorry, it's probably pretty low. The IRS said most taxpayers eligible for the federal stimulus payments, formally known as Economic Impact Payments, have already received them.
The special payments announced by the IRS are being sent to those taxpayers who filed a 2021 tax return but left the data field for the Recovery Rebate Credit blank or they filled it out as $0 when they were actually eligible for the credit.
How will this work?
Eligible taxpayers don't have to take action. The payments will go out automatically this month and should arrive by direct deposit or check by late January 2025. They'll be sent to the bank account listed on the taxpayer's 2023 return or to the address the IRS has on file.
Payments will vary but the maximum amount will be $1,400 per individual. The IRS has posted information online about eligibility and how the payment was calculated.
The IRS plans to send separate letters to eligible taxpayers notifying them of the special payment.
What if I haven't filed my 2021 tax return yet?
You still might be able to receive the money. However, taxpayers need to file a tax return and claim the Recovery Rebate Credit by the April 15, 2025, deadline, even if any income from a job, business or other source was minimal or nonexistent, according to IRS.
How many rounds of COVID stimulus payments were there?
There were three rounds of payments to households impacted by the pandemic, totaling $814 billion. IRS based the amounts that taxpayers received on their income, tax filing status and number of children or qualifying dependents.
In March 2020, eligible individuals received up to $1,200 per income tax filer and $500 per child under the CARES Act. In December 2020, eligible individuals received up to $600 per income tax filer and $600 per child under the Consolidated Appropriations Act. In March 2021, eligible individuals received up to $1,400 per income tax filer and $1,400 per child under the American Rescue Plan Act.
What the top 1% pay in taxes in each state
What the top 1% pay in taxes in each state
The top 1% of earners typically pay much more in taxes than many other Americans. Nationwide, this group contributes 45% of total personal income taxes collected. However, the top 1% doesn't pay the same amount everywhere. Therefore, some states may be more dependent on this group than others for tax revenue.
With this in mind, examined the most recent IRS tax return data to determine exactly how much the top 1% of earners in each state pays in taxes, both nominally and relative to the rest of taxpayers.
Key Findings
- The top 1% of earners contribute over 60% of the income taxes collected from Wyoming residents. Wyoming's top 1% paid $3.16 billion in taxes compared to a total of $5.12 billion paid by all Wyoming residents. This was the highest relative contribution by the top 1% in any state. For comparison, Alaska's 1% contributed the lowest relative share of income taxes at 29.8%.
- Connecticut's top 1% pays the highest effective tax rate. The top 1% in Connecticut pay 27.69% on each dollar of income, while the average Connecticut taxpayer pays a rate of 17.7%. Meanwhile, the top 1% of earners in Arkansas saw the lowest effective tax rate for that cohort at 21.41%.Â
- The top 1% earns more than 33% of income in four states. In Wyoming, the top 1% brings in 40.6% of all adjusted gross income (AGI), which adds up to $13.25 billion. The top 1% in Nevada (34.3%), Florida (34%) and New York (33.5%) also have particularly outsized earnings when compared with the local 99%.
- Nationwide, the top 1% of earners pay a 25.95% effective tax rate. This yielded a total of $993.7 billion dollars in income taxes paid by the top 1% over one year, or 45% of all individual income tax collected. The total adjusted gross income for this group over the same time was $3.8 billion.
Top 10 States With the Highest Tax Payments by the Top 1%
- California
- Total income tax paid by top 1%: $165,087,786
- Number of top 1% returns: 177,645
- Average effective tax rate on 1% earners: 27.2%
- Total income tax share paid by 1%: 45.8%
- Average effective tax rate for all taxpayers: 16.9%
- New York
- Total income tax paid by top 1%: $99,157,333
- Number of top 1% returns: 92,142
- Average effective tax rate on 1% earners: 27.3%
- Total income tax share paid by 1%: 52.8%
- Average effective tax rate for all taxpayers: 17.3%
- Florida
- Total income tax paid by top 1%: $91,942,807
- Number of top 1% returns: 101,940
- Average effective tax rate on 1% earners: 25.8%
- Total income tax share paid by 1%: 55.2%
- Average effective tax rate for all taxpayers: 15.8%
- Texas
- Total income tax paid by top 1%: $81,417,526
- Number of top 1% returns: 126,128
- Average effective tax rate on 1% earners: 26%
- Total income tax share paid by 1%: 46.7%
- Average effective tax rate for all taxpayers: 14.6%
- Illinois
- Total income tax paid by top 1%: $40,234,949
- Number of top 1% returns: 56,796
- Average effective tax rate on 1% earners: 26%
- Total income tax share paid by 1%: 44.8%
- Average effective tax rate for all taxpayers: 15.1%
- Massachusetts
- Total income tax paid by top 1%: $35,931,120
- Number of top 1% returns: 32,598
- Average effective tax rate on 1% earners: 26.6%
- Total income tax share paid by 1%: 45.8%
- Average effective tax rate for all taxpayers: 17.4%
- Pennsylvania
- Total income tax paid by top 1%: $31,046,021
- Number of top 1% returns: 59,123
- Average effective tax rate on 1% earners: 26%
- Total income tax share paid by 1%: 40.1%
- Average effective tax rate for all taxpayers: 14%
- New Jersey
- Total income tax paid by top 1%: $30,615,181
- Number of top 1% returns: 42,437
- Average effective tax rate on 1% earners: 27.2%
- Total income tax share paid by 1%: 37.7%
- Average effective tax rate for all taxpayers: 16.1%
- Washington
- Total income tax paid by top 1%: $27,320,236
- Number of top 1% returns: 35,456
- Average effective tax rate on 1% earners: 25.8%
- Total income tax share paid by 1%: 39.1%
- Average effective tax rate for all taxpayers: 15.9%
- Georgia
- Total income tax paid by top 1%: $24,761,176
- Number of top 1% returns: 45,961
- Average effective tax rate on 1% earners: 24.8%
- Total income tax share paid by 1%: 44%
- Average effective tax rate for all taxpayers: 13.9%
Top 10 States Where the Top 1% Pays the Highest Portion of the Income Tax Base
- Wyoming
- Total income tax share paid by top 1%: 61.7%
- Total income tax paid by top 1%: $3,160,269
- Number of top 1% returns: 2,616
- Average effective tax rate on 1% earners: 23.9%
- Average effective tax rate for all taxpayers: 15.7%
- Nevada
- Total income tax share paid by top 1%: 56.4%
- Total income tax paid by top 1%: $13,096,631
- Number of top 1% returns: 14,766
- Average effective tax rate on 1% earners: 25.3%
- Average effective tax rate for all taxpayers: 15.4%
- Florida
- Total income tax share paid by top 1%: 55.2%
- Total income tax paid by top 1%: $91,942,807
- Number of top 1% returns: 101,940
- Average effective tax rate on 1% earners: 25.8%
- Average effective tax rate for all taxpayers: 15.8%
- New York
- Total income tax share paid by top 1%: 52.8%
- Total income tax paid by top 1%: $99,157,333
- Number of top 1% returns: 92,142
- Average effective tax rate on 1% earners: 27.3%
- Average effective tax rate for all taxpayers: 17.3%
- Arkansas
- Total income tax share paid by top 1%: 50.7%
- Total income tax paid by top 1%: $6,311,373
- Number of top 1% returns: 12,184
- Average effective tax rate on 1% earners: 21.4%
- Average effective tax rate for all taxpayers: 12.4%
- Connecticut
- Total income tax share paid by top 1%: 49.4%
- Total income tax paid by top 1%: $19,699,624
- Number of top 1% returns: 16,811
- Average effective tax rate on 1% earners: 27.7%
- Average effective tax rate for all taxpayers: 17.7%
- Utah
- Total income tax share paid by top 1%: 47.3%
- Total income tax paid by top 1%: $9,151,169
- Number of top 1% returns: 13,739
- Average effective tax rate on 1% earners: 24.6%
- Average effective tax rate for all taxpayers: 13.6%
- Texas
- Total income tax share paid by top 1%: 46.7%
- Total income tax paid by top 1%: $81,417,526
- Number of top 1% returns: 126,128
- Average effective tax rate on 1% earners: 26%
- Average effective tax rate for all taxpayers: 14.6%
- California
- Total income tax share paid by top 1%: 45.8%
- Total income tax paid by top 1%: $165,087,786
- Number of top 1% returns: 177,645
- Average effective tax rate on 1% earners: 27.2%
- Average effective tax rate for all taxpayers: 16.9%
- Massachusetts
- Total income tax share paid by top 1%: 45.8%
- Total income tax paid by top 1%: $35,931,120
- Number of top 1% returns: 32,598
- Average effective tax rate on 1% earners: 26.6%
- Average effective tax rate for all taxpayers: 17.4%
Top 10 States With the Highest Effective Tax Rates on the Top 1% of Earners
- Connecticut
- Average effective tax rate on 1% earners: 27.69%
- Total income tax paid by top 1%: $19,699,624
- Number of top 1% returns: 16,811
- Total income tax share paid by 1%: 49.4%
- Average effective tax rate for all taxpayers: 17.7%
- New York
- Average effective tax rate on 1% earners: 27.30%
- Total income tax paid by top 1%: $99,157,333
- Number of top 1% returns: 92,142
- Total income tax share paid by 1%: 52.8%
- Average effective tax rate for all taxpayers: 17.3%
- New Jersey
- Average effective tax rate on 1% earners: 27.20%
- Total income tax paid by top 1%: $30,615,181
- Number of top 1% returns: 42,437
- Total income tax share paid by 1%: 37.7%
- Average effective tax rate for all taxpayers: 16.1%
- California
- Average effective tax rate on 1% earners: 27.16%
- Total income tax paid by top 1%: $165,087,786
- Number of top 1% returns: 177,645
- Total income tax share paid by 1%: 45.8%
- Average effective tax rate for all taxpayers: 16.9%
- New Hampshire
- Average effective tax rate on 1% earners: 26.72%
- Total income tax paid by top 1%: $5,090,444
- Number of top 1% returns: 6,742
- Total income tax share paid by 1%: 42.3%
- Average effective tax rate for all taxpayers: 15.5%
- Massachusetts
- Average effective tax rate on 1% earners: 26.58%
- Total income tax paid by top 1%: $35,931,120
- Number of top 1% returns: 32,598
- Total income tax share paid by 1%: 45.8%
- Average effective tax rate for all taxpayers: 17.4%
- Delaware
- Average effective tax rate on 1% earners: 26.16%
- Total income tax paid by top 1%: $1,936,324
- Number of top 1% returns: 4,662
- Total income tax share paid by 1%: 35%
- Average effective tax rate for all taxpayers: 13.3%
- Texas
- Average effective tax rate on 1% earners: 26.01%
- Total income tax paid by top 1%: $81,417,526
- Number of top 1% returns: 126,128
- Total income tax share paid by 1%: 46.7%
- Average effective tax rate for all taxpayers: 14.6%
- Illinois
- Average effective tax rate on 1% earners: 25.99%
- Total income tax paid by top 1%: $40,234,949
- Number of top 1% returns: 56,796
- Total income tax share paid by 1%: 44.8%
- Average effective tax rate for all taxpayers: 15.1%
- Virginia
- Average effective tax rate on 1% earners: 25.97%
- Total income tax paid by top 1%: $21,750,680
- Number of top 1% returns: 38,483
- Total income tax share paid by 1%: 36.8%
- Average effective tax rate for all taxpayers: 14.6%
Data and Methodology
SmartAsset analyzed the most recent data from the IRS for personal income tax returns (2021) to rank states by the total income tax paid by the top 1%. The effective tax rates for the 1% and total population were also compared, as well as the percent of total income tax collected contributed by the top 1% in each state.
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