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William Perez

April 18 is Tax Freedom Day for 2013

By April 18, 2013

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April 18th is the day when, on average, Americans have earned enough income to pay their federal and state tax bill in full, a concept called Tax Freedom DayŽ.

The Tax Foundation calculates a Tax Freedom Day based on the federal budget and projections for state and local taxes, and data from the Census and the Bureau of Economic Analysis. The Tax Foundation calculates a Tax Freedom Day for each state. The Tax Foundation calculates the total amount of federal, state and local taxes, and divides this by the nation's income to arrive at a ratio. This ratio is then expressed as a day of the year.

On average, Americans will spend about 32 days earning enough income sufficient to pay their federal income tax and another 24 days to earn enough income to pay for Social Security and Medicare taxes. The following chart from the Tax Foundation shows the number of days needed to pay for various types of taxes.

Tax Freedom Day ® 2013 as calculated by the Tax Foundation.

The Tax Foundation notes that federal income taxes and payroll taxes have increased for 2013, resulting in 2013's Tax Freedom Day being later than it was for the year 2012.  The increased taxes for 2013 includes the new 39.6% tax bracket, the new Medicare surtax on investment and wage incomes, and the new 20% tax rate on long-term gains.

Additional information about Tax Freedom Day:

 

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