How Much the Rich Would Actually Pay If They Had Higher Tax Rates

No one wants to pay more in taxes, but many Americans consistently call for higher taxes on the rich. With the new Biden Administration taking charge on January 20, 2021, those calls might be heeded, at least to some degree. Biden has proposed raising the tax top tax bracket for those earning at least $400,000 to 39.6% from the current 37%, in addition to some other tax code alterations.

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Whether or not tax rates actually rise, here’s the bottom line: For most of contemporary American history, the idea of higher taxes for the rich has been a reality, with historic tax rates reaching well above 37% for the country’s highest earners. In the boom years of 1951-64, for example, the top marginal rate was an astounding 91%, and it actually peaked at 92% during 1952 and 1953. All the way until 1980, the top rate was a whopping 70%.

To find out how higher tax rates could impact the rich today, GOBankingRates examined the effects of higher marginal tax rates on the top 5% in income in every state. So, instead of paying taxes on a 37% rate — the highest current tax rate in the U.S. — GoBankingRates looked at how much the top 5% would pay if the rates were raised to rates proposed by Joe Biden and to rates paid by Americans in 1978, after taking the standard deduction.

The difference in some states is quite noticeable, with high earners in Connecticut, for example, paying significantly more in a theoretical 70% bracket, as in 1978, than those in lower-income states like West Virginia. 

Here’s how the wealthy would fare under Biden’s slightly revised tax brackets than if we went back to 1978 marginal rates. 

Last updated: Mar. 5, 2021

Alabama

• Average income of top 5%: $311,524
• Taxes paid with 2021 tax brackets: $79,185 single, $56,784 married filing jointly
• Taxes paid with Biden tax brackets: $79,185 single, $56,784 married filing jointly
• Taxes paid with 1978 tax brackets: $198,077 single, $184,567 married filing jointly

Alabama’s top 5% rank fairly low on the income scale, compared to other states; however, their tax bite isn’t nearly as bad either. Even a 70% marginal rate, as seen in 1978, would translate to about a 59% effective tax rate, one of the lowest of any state. 

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Alaska

• Average income of top 5%: $381,025
• Taxes paid with 2021 tax brackets: $103,511 single, $75,550 married filing jointly
• Taxes paid with Biden tax brackets: $103,511 single, $75,550 married filing jointly
• Taxes paid with 1978 tax brackets: $246,728 single, $233,218 married filing jointly

For a high-income, high-expense state, the top 5% in Alaska earn a relatively “low” $381,025 on average. Higher taxes for the wealthy would cause significant damage to take-home pay for the richest 5%; a jump from the current top marginal rate to the top 1978 of 70% would result in more than $143,000 in additional taxes. However, there would be no change under the Biden tax plan.

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Arizona

• Average income of top 5%: $359,321
• Taxes paid with 2021 tax brackets: $95,914 single, $68,605 married filing jointly
• Taxes paid with Biden tax brackets: $95,914 single, $68,605 married filing jointly
• Taxes paid with 1978 tax brackets: $231,535 single, $218,025 married filing jointly

Every 10% increase in marginal tax rates would increase tax payments for the top 5% by about $36,000 each, which isn’t as bad as the effect in some other states.

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Arkansas

• Average income of top 5%: $307,214
• Taxes paid with 2021 tax brackets: $77,677 single, $55,749 married filing jointly
• Taxes paid with Biden tax brackets: $77,677 single, $55,749 married filing jointly
• Taxes paid with 1978 tax brackets: $195,060 single, $181,550 married filing jointly

In Arkansas, an income of $307,214 is enough to put taxpayers in the top 5%. Arkansas is another state where the Biden tax plan wouldn’t touch those earning in the top 5%, unlike the 1978 brackets, which would more than double the Biden tax hit. 

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California

• Average income of top 5%: $499,596
• Taxes paid with 2021 tax brackets: $145,010 single, $115,162 married filing jointly
• Taxes paid with Biden tax brackets: $149,014 single, $115,162 married filing jointly
• Taxes paid with 1978 tax brackets: $329,727 single, $316,217 married filing jointly

California’s top earners pull down a lot of money, but taxes can be devastating in the higher brackets. California is one of the states where an income in the top 5% would trigger additional taxes under the Biden tax plan, to the tune of about $4,000. 

Colorado

• Average income of top 5%: $422,054
• Taxes paid with 2021 tax brackets: $117,871 single, $88,679 married filing jointly
• Taxes paid with Biden tax brackets: $118,308 single, $88,679 married filing jointly
• Taxes paid with 1978 tax brackets: $275,448 single, $261,938 married filing jointly

Home of the Mile High City, Colorado also boasts a mile-high average income for its richest 5%. Taxes can take a huge bite out of this income though, as even the Biden tax plan will trigger higher taxes in this group. 

Connecticut

• Average income of top 5%: $564,376
• Taxes paid with 2021 tax brackets: $168,246 single, $137,835 married filing jointly
• Taxes paid with Biden tax brackets: $174,667 single, $137,835 married filing jointly
• Taxes paid with 1978 tax brackets: $375,073 single, $361,563 married filing jointly

The top 5% in Connecticut earn the highest average income in the country, pulling down more than double what the top 5% earns in the lowest-earning state, Mississippi. The state also boasts one of the wealthiest school districts in the country. In this high-income state, the Biden tax proposal triggers an additional $6,000-plus in taxes, but that’s still far below the 66.46% of income that the 1978 tax rates would draw. 

Delaware

• Average income of top 5%: $388,067
• Taxes paid with 2021 tax brackets: $105,975 single, $77,803 married filing jointly
• Taxes paid with Biden tax brackets: $105,975 single, $77,803 married filing jointly
• Taxes paid with 1978 tax brackets: $251,657 single, $238,147 married filing jointly

Delaware’s top earners have a middle-of-the-road average income and a similar average tax burden. These earners won’t see any changes under a Biden tax law, which would only take about one-third of what 1978 tax brackets would. 

Florida

• Average income of top 5%: $393,836
• Taxes paid with 2021 tax brackets: $107,994 single, $79,650 married filing jointly
• Taxes paid with Biden tax brackets: $107,994 single, $79,650 married filing jointly
• Taxes paid with 1978 tax brackets: $255,695 single, $242,185 married filing jointly

Florida’s top 5% earners pull down nearly $400,000, but they’d only pay an effective rate of about 27% as single earners under the Biden tax plan, same as in 2021. Joint filers would only owe about 20% of their income under both tax plans. That compares to rates of over 60% for both filing statuses under the 1978 plan.

Georgia

• Average income of top 5%: $384,511
• Taxes paid with 2021 tax brackets: $104,731 single, $76,666 married filing jointly
• Taxes paid with Biden tax brackets: $104,731 single, $76,666 married filing jointly
• Taxes paid with 1978 tax brackets: $249,168 single, $235,658 married filing jointly

Georgia’s top 5% earn a middle-of-the-road $384,511, with joint filers only owing about $77,000 under both 2021 and Biden tax plans. This rate would more than triple under 1978 tax brackets, to over $235,000. 

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Hawaii

• Average income of top 5%: $413,913
• Taxes paid with 2021 tax brackets: $115,021 single, $86,074 married filing jointly
• Taxes paid with Biden tax brackets: $115,084 single, $86,074 married filing jointly
• Taxes paid with 1978 tax brackets: $269,749 single, $256,239 married filing jointly

Hawaii is many people’s idea of paradise thanks to its lush beauty, but a top 5% income of $413,913 is also quite attractive. Even at this income level, however, Hawaii’s top 5% will essentially pay the same taxes in 2021 as they would under Biden’s tax plan. 

Idaho

• Average income of top 5%: $314,688
• Taxes paid with 2021 tax brackets: $80,293 single, $57,543 married filing jointly
• Taxes paid with Biden tax brackets: $80,293 single, $57,543 married filing jointly
• Taxes paid with 1978 tax brackets: $200,292 single, $186,782 married filing jointly

Idaho’s top 5% earners face one of the smallest tax bills among the 50 states. Under the 70% tax bracket of 1978, Idaho’s top 5% would still pay out an effective tax rate of below 60% if married and filing jointly. Under the Biden tax plan, taxes would amount to about 25% for those same filers. 

Illinois

• Average income of top 5%: $429,900
• Taxes paid with 2021 tax brackets: $120,617 single, $91,190 married filing jointly
• Taxes paid with Biden tax brackets: $121,415 single, $91,190 married filing jointly
• Taxes paid with 1978 tax brackets: $280,940 single, $267,430 married filing jointly

Illinois has one of the highest average incomes in the nation for the top 5% of earners, but it comes with a big tax bill. Under the Biden tax plan, single filers would pay about $1,000 more in taxes, far less than the additional $160,000 required under the 1978 tax structure. 

Indiana

• Average income of top 5%: $323,452
• Taxes paid with 2021 tax brackets: $83,360 single, $59,646 married filing jointly
• Taxes paid with Biden tax brackets: $83,360 single, $59,646 married filing jointly
• Taxes paid with 1978 tax brackets: $206,426 single, $192,916 married filing jointly

Top incomes in Indiana are barely over $320,000, about 57% of those in high-income states like Connecticut. The tradeoff is that taxes in Indiana aren’t as much of a burden, with take-home pay of $263,806 under the 2021 and Biden tax brackets for joint filers. 

Iowa

• Average income of top 5%: $327,806
• Taxes paid with 2021 tax brackets: $84,884 single, $60,691 married filing jointly
• Taxes paid with Biden tax brackets: $84,884 single, $60,691 married filing jointly
• Taxes paid with 1978 tax brackets: $209,474 single, $195,964 married filing jointly

Iowa’s richest 5% percent are in the same category as their Midwestern brethren in Indiana. Both states have relatively modest top incomes, with taxes not overly burdensome under either the Biden or 2021 tax brackets, with take-home pay of  $242,922 and $267,115 for single and joint filers, respectively. 

Kansas

• Average income of top 5%: $351,143
• Taxes paid with 2021 tax brackets: $93,052 single, $66,292 married filing jointly
• Taxes paid with Biden tax brackets: $93,052 single, $66,292 married filing jointly
• Taxes paid with 1978 tax brackets: $225,810 single, $212,300 married filing jointly

Kansas has about an average income for the top 5%, at just over $350,000, and its tax burden is fairly average as well. Higher rates under Biden would not apply to these earners at current levels, remaining the same as with the 2021 tax brackets. 

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Kentucky

• Average income of top 5%: $322,912
• Taxes paid with 2021 tax brackets: $83,171 single, $59,517 married filing jointly
• Taxes paid with Biden tax brackets: $83,171 single, $59,517 married filing jointly
• Taxes paid with 1978 tax brackets: $206,048 single, $192,538 married filing jointly

Kentucky has one of the lowest national average incomes for the top 5%, and taxes are similarly low. If rates were to jump up to 70%, as they were in 1978, the average top earner would lose less than 59% to taxes. The higher taxes on big earners proposed by the Biden administration would not affect those earning at the 5% level, as joint filers would still lose about 18% to taxes, same as under the 2021 brackets. 

Louisiana

• Average income of top 5%: $325,637
• Taxes paid with 2021 tax brackets: $84,125 single, $60,171 married filing jointly
• Taxes paid with Biden tax brackets: $84,125 single, $60,171 married filing jointly
• Taxes paid with 1978 tax brackets: $207,956 single, $194,446 married filing jointly

The sportsman’s paradise of Louisiana boasts a moderate income of $325,637 for the average top 5% in the state, but a rise in marginal tax rates could end up taking a decent bite out of that income. Taxes on an average top earner would rise by over $120,000 for single filers if the 70% tax bracket from 1978 were to reappear. Under the Biden tax law, both single and joint filers would pay the same as they would in 2021.

Maine

• Average income of top 5%: $321,478
• Taxes paid with 2021 tax brackets: $82,669 single, $59,173 married filing jointly
• Taxes paid with Biden tax brackets: $82,669 single, $59,173 married filing jointly
• Taxes paid with 1978 tax brackets: $205,045 single, $191,535 married filing jointly

Increases in marginal tax rates won’t have a huge effect on the top 5% in Maine, with taxes remaining the same under the Biden tax proposal as they are for 2021. Both of these tax structures save joint filers over $130,000 in taxes vs. the 1978 tax brackets. 

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Maryland

• Average income of top 5%: $465,002
• Taxes paid with 2021 tax brackets: $132,902 single, $103,054 married filing jointly
• Taxes paid with Biden tax brackets: $135,315 single, $103,054 married filing jointly
• Taxes paid with 1978 tax brackets: $305,511 single, $292,001 married filing jointly

Maryland’s richest 5% would owe a whopping $305,511 for single filers under 1978’s 70% tax bracket. However, under the Biden tax proposal, that would drop to a much more manageable $135,315. That’s still about $2,400 more than single filers stand to pay under the 2021 tax structure. 

Massachusetts

• Average income of top 5%: $501,490
• Taxes paid with 2021 tax brackets: $145,673 single, $115,825 married filing jointly
• Taxes paid with Biden tax brackets: $149,764 single, $115,825 married filing jointly
• Taxes paid with 1978 tax brackets: $331,053 single, $317,543 married filing jointly

Earning $501,490 sounds great, but that average income of the top 5% in Massachusetts would be decimated by a jump in marginal tax rates to 1978 levels. That year’s 70% marginal rate translates to $317,543 in taxes for joint filers. However, even under the Biden tax law, joint filers would owe only $115,825 on that income, the same as in 2021. 

Michigan

• Average income of top 5%: $348,757
• Taxes paid with 2021 tax brackets: $92,217 single, $65,720 married filing jointly
• Taxes paid with Biden tax brackets: $92,217 single, $65,720 married filing jointly
• Taxes paid with 1978 tax brackets: $224,140 single, $210,630 married filing jointly

No one likes paying more taxes, and under the Biden tax plan, neither single nor joint filers in Michigan would have to worry, as their taxes would remain the same as in 2021. If the 70% tax bracket from 1978 was revived, taxes for joint filers would jump by about $145,000 on earnings of $348,757. 

Minnesota

• Average income of top 5%: $402,551
• Taxes paid with 2021 tax brackets: $111,045 single, $82,438 married filing jointly
• Taxes paid with Biden tax brackets: $111,045 single, $82,438 married filing jointly
• Taxes paid with 1978 tax brackets: $261,796 single, $248,286 married filing jointly

High-earning Minnesotans are already used to high taxes, with single filers paying out $111,045 on average at the current 37% marginal rate. Things were much worse in 1978, however, with single filers paying a tab of over $150,000 more on the same income. 

Mississippi

• Average income of top 5%: $279,336
• Taxes paid with 2021 tax brackets: $67,919 single, $49,059 married filing jointly
• Taxes paid with Biden tax brackets: $67,919 single, $49,059 married filing jointly
• Taxes paid with 1978 tax brackets: $175,545 single, $162,035 married filing jointly

Mississippi has one of the lowest incomes in the country on an average basis, but the state is one in which earning $100,000 is enough to make you rich. However, even in this low-cost state, the top 5% still clear nearly $280,000 on average. At the current top marginal rate of 37 percent, that amounts to a nearly $68,000 tax bite. This amount wouldn’t change for Mississippi’s top 5% under the Biden tax plan. 

Missouri

• Average income of top 5%: $339,267
• Taxes paid with 2021 tax brackets: $88,895 single, $63,442 married filing jointly
• Taxes paid with Biden tax brackets: $88,895 single, $63,442 married filing jointly
• Taxes paid with 1978 tax brackets: $217,497 single, $203,987 married filing jointly

Top 5% earners in the Show-Me State earn just under $340,000 per year, and their tax burden is fairly average on a national level. Single filers under both the 2021 and the proposed Biden tax brackets would still take home over $250,000, with joint filers enjoying about $276,000 in take-home pay. 

Montana

• Average income of top 5%: $329,227
• Taxes paid with 2021 tax brackets: $85,381 single, $61,032 married filing jointly
• Taxes paid with Biden tax brackets: $85,381 single, $61,032 married filing jointly
• Taxes paid with 1978 tax brackets: $210,469 single, $196,959 married filing jointly

Top incomes in Montana are on the low side, relatively speaking, but the upside is the low relative tax burden. Under both the 2021 and the proposed Biden tax brackets, joint filers earning the top 5% average income will pay just over $61,000 in taxes. 

Nebraska

• Average income of top 5%: $338,426
• Taxes paid with 2021 tax brackets: $88,601 single, $63,240 married filing jointly
• Taxes paid with Biden tax brackets: $88,601 single, $63,240 married filing jointly
• Taxes paid with 1978 tax brackets: $216,908 single, $203,398 married filing jointly

Nebraska is pretty near the national average when it comes to top earners and taxes. If brackets were to return to 1978 rates, single filers in the top 5% would owe nearly $217,000 in taxes, but under current tax law — and under the Biden Administration tax proposal — they’ll only owe $88,601. 

Nevada

• Average income of top 5%: $370,404
• Taxes paid with 2021 tax brackets: $99,793 single, $72,151 married filing jointly
• Taxes paid with Biden tax brackets: $99,793 single, $72,151 married filing jointly
• Taxes paid with 1978 tax brackets: $239,293 single, $225,783 married filing jointly

Incomes are above-average at the top in Nevada, with the top 5% earning over $370,000 on average. However, both single and joint filers pay less than $100,000 in federal taxes under both the 2021 and Biden tax brackets. Coupled with the lack of state income tax, the top 5% in Nevada get to keep a good portion of their income. 

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New Hampshire

• Average income of top 5%: $396,816
• Taxes paid with 2021 tax brackets: $109,037 single, $80,603 married filing jointly
• Taxes paid with Biden tax brackets: $109,037 single, $80,603 married filing jointly
• Taxes paid with 1978 tax brackets: $257,781 single, $244,271 married filing jointly

New Hampshire’s highest paid earn nearly $400,000 on average, but high taxes take a big bite out of that income. Single filers in the top 5% can expect to pay nearly $110,000 in taxes even under the 2021 or Biden tax brackets. 

New Jersey

• Average income of top 5%: $518,438
• Taxes paid with 2021 tax brackets: $151,605 single, $121,757 married filing jointly
• Taxes paid with Biden tax brackets: $156,476 single, $121,757 married filing jointly
• Taxes paid with 1978 tax brackets: $342,917 single, $329,407 married filing jointly

Top salaries in New Jersey are among the highest in the nation, but a rise in marginal tax rates could translate into a huge drop in take-home pay. If rates rise from the current top rate of 37% to 70%, as they were in 1978, New Jersey’s richest 5% would face nearly $343,000 in taxes if single, and over $329,000 if filing jointly. Even under current tax law, single filers can expect to pay more than $156,000. 

New Mexico

• Average income of top 5%: $305,961
• Taxes paid with 2021 tax brackets: $77,238 single, $55,449 married filing jointly
• Taxes paid with Biden tax brackets: $77,238 single, $55,449 married filing jointly
• Taxes paid with 1978 tax brackets: $194,183 single, $180,673 married filing jointly

New Mexico’s wealthiest 5% earn one of the nation’s lowest average salaries, but they also have less to fear of the tax man. Under both current tax law and the Biden Administration proposal, joint filers would only have to pay about $55,000 in taxes on salaries of over $300,000. 

New York

• Average income of top 5%: $525,456
• Taxes paid with 2021 tax brackets: $154,061 single, $124,213 married filing jointly
• Taxes paid with Biden tax brackets: $159,255 single, $124,213 married filing jointly
• Taxes paid with 1978 tax brackets: $347,829 single, $334,319 married filing jointly

Home to some of the country’s wealthiest zip codes, New York has a combination of high earners and high tax rates. Top-earning New Yorkers would end up paying about $5,000 more in tax under the Biden proposal, but joint filers would pay the same. Under 1978 tax law, taxes were confiscatory, taking over 66% of the income of single filers.

North Carolina

• Average income of top 5%: $354,732
• Taxes paid with 2021 tax brackets: $94,308 single, $67,154 married filing jointly
• Taxes paid with Biden tax brackets: $94,308 single, $67,154 married filing jointly
• Taxes paid with 1978 tax brackets: $228,322 single, $214,812 married filing jointly

The tax burden for North Carolina’s richest 5% remains under $95,000 for single filers under the proposed Biden tax brackets. Joint filers pay less than 19% of their income under both the Biden and the 2021 tax brackets. In 1978, taxes for joint filers would jump by nearly $150,000.

North Dakota

• Average income of top 5%: $373,136
• Taxes paid with 2021 tax brackets: $100,749 single, $73,026 married filing jointly
• Taxes paid with Biden tax brackets: $100,749 single, $73,026 married filing jointly
• Taxes paid with 1978 tax brackets: $241,205 single, $227,695 married filing jointly

Perhaps surprisingly, top earners in North Dakota pull down above-average incomes of nearly $375,000 on average. This pushes the total tax bill for single filers to over $100,000 under both the current 2021 brackets and the proposed Biden Administration rates. 

Ohio

• Average income of top 5%: $340,866
• Taxes paid with 2021 tax brackets: $89,455 single, $63,826 married filing jointly
• Taxes paid with Biden tax brackets: $89,455 single, $63,826 married filing jointly
• Taxes paid with 1978 tax brackets: $218,616 single, $205,106 married filing jointly

Ohio’s top 5% don’t earn as much as in some other states, and taxes are commensurately lower. Joint filers under current and proposed Biden tax brackets take home nearly $280,000 with a top 5% salary. 

Oklahoma

• Average income of top 5%: $329,425
• Taxes paid with 2021 tax brackets: $85,451 single, $61,080 married filing jointly
• Taxes paid with Biden tax brackets: $85,451 single, $61,080 married filing jointly
• Taxes paid with 1978 tax brackets: $210,608 single, $197,098 married filing jointly

Oklahoma’s top 5% earn a bit less than the national average, keeping tax obligations low. Joint filers enjoy average take-home pay of nearly $270,000 under the Biden and 2021 tax brackets. 

Oregon

• Average income of top 5%: $360,559
• Taxes paid with 2021 tax brackets: $96,347 single, $69,001 married filing jointly
• Taxes paid with Biden tax brackets: $96,347 single, $69,001 married filing jointly
• Taxes paid with 1978 tax brackets: $232,401 single, $218,891 married filing jointly

Oregon’s top earners make less than both their northern (Washington) and southern (California) neighbors, but single filers are still on the hook for nearly $100,000 in taxes under either the Biden or 2021 tax brackets. Using 1978’s top marginal rate would have pushed that amount over $230,000. 

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Pennsylvania

• Average income of top 5%: $383,150
• Taxes paid with 2021 tax brackets: $104,254 single, $76,230 married filing jointly
• Taxes paid with Biden tax brackets: $104,254 single, $76,230 married filing jointly
• Taxes paid with 1978 tax brackets: $248,215 single, $234,705 married filing jointly

Pennsylvania’s average income of over $383,000 is well above average. The Biden Administration tax proposals would keep average amounts owed for both single and joint filers at the same levels as in 2021. 

Rhode Island

• Average income of top 5%: $389,628
• Taxes paid with 2021 tax brackets: $106,522 single, $78,303 married filing jointly
• Taxes paid with Biden tax brackets: $106,522 single, $78,303 married filing jointly
• Taxes paid with 1978 tax brackets: $252,750 single, $239,240 married filing jointly

Rhode Island’s average top 5% income is pushing towards $400,000. Taxes for these top earners were over $239,000 for joint filers using 1978 rates, but they’re just over $78,000 under both the 2021 and Biden tax brackets. 

South Carolina

• Average income of top 5%: $334,492
• Taxes paid with 2021 tax brackets: $87,224 single, $62,296 married filing jointly
• Taxes paid with Biden tax brackets: $87,224 single, $62,296 married filing jointly
• Taxes paid with 1978 tax brackets: $214,154 single, $200,644 married filing jointly

A switch from 2021 tax brackets to the Biden tax scheme won’t have much effect on South Carolina’s top 5%, with both single and joint filers paying the same under both scenarios. Under 1978 brackets, both single and joint filers would owe over $200,000 in taxes. 

South Dakota

• Average income of top 5%: $328,321
• Taxes paid with 2021 tax brackets: $85,064 single, $60,815 married filing jointly
• Taxes paid with Biden tax brackets: $85,064 single, $60,815 married filing jointly
• Taxes paid with 1978 tax brackets: $209,835 single, $196,325 married filing jointly

High earners in South Dakota have relatively low incomes compared to top earners in other states. The upside is that joint filers under both 2021 and Biden tax brackets pay just over $60,000 in tax. Single filers can expect to take home about $243,000. 

Tennessee

• Average income of top 5%: $354,339
• Taxes paid with 2021 tax brackets: $94,170 single, $67,059 married filing jointly
• Taxes paid with Biden tax brackets: $94,170 single, $67,059 married filing jointly
• Taxes paid with 1978 tax brackets: $228,047 single, $214,537 married filing jointly

The top 5% in Tennessee earn about $350,000 on average, but their tax burden remains under $100,000 for singles, and under $70,000 for joint filers. Neither of those figures would rise under the Biden tax proposal. 

Texas

• Average income of top 5%: $402,552
• Taxes paid with 2021 tax brackets: $111,045 single, $82,439 married filing jointly
• Taxes paid with Biden tax brackets: $111,045 single, $82,439 married filing jointly
• Taxes paid with 1978 tax brackets: $261,796 single, $248,286 married filing jointly

Top earners in Texas take home some of the biggest paychecks in the nation. These richest 5% are no doubt grateful that they don’t owe any Texas state income tax because their federal tax bill is quite large, with singles owing over $111,000. Still, that’s a huge break from the 1978 tax rates, which would see singles owing over $261,000. 

Utah

• Average income of top 5%: $376,692
• Taxes paid with 2021 tax brackets: $101,994 single, $74,163 married filing jointly
• Taxes paid with Biden tax brackets: $101,994 single, $74,163 married filing jointly
• Taxes paid with 1978 tax brackets: $243,694 single, $230,184 married filing jointly

Single filers in Utah’s top 5% owe just over $100,000 in taxes on the average salary of $376,692. Joint filers fare better, owing just over $74,000. Both groups will pay the same if the Biden Administration tax brackets become law.

Vermont

• Average income of top 5%: $340,892
• Taxes paid with 2021 tax brackets: $89,464 single, $63,832 married filing jointly
• Taxes paid with Biden tax brackets: $89,464 single, $63,832 married filing jointly
• Taxes paid with 1978 tax brackets: $218,634 single, $205,124 married filing jointly

The average income of top earners in Vermont is far below that in high-income states like New York, but Vermont’s top 5% pay less under both 2021 and Biden tax brackets. In 1978, single filers could expect to pay almost $130,000 in additional taxes. 

Virginia

• Average income of top 5%: $442,566
• Taxes paid with 2021 tax brackets: $125,050 single, $95,243 married filing jointly
• Taxes paid with Biden tax brackets: $126,431 single, $95,243 married filing jointly
• Taxes paid with 1978 tax brackets: $289,806 single, $276,296 married filing jointly

Virginia is another state where the top 5% earn in the neighborhood of $450,000 and subsequently face a large tax burden. The new Biden tax brackets would increase the taxes owed by single filers by about $1,400, although joint filers would have the same tax liability. 

Washington

• Average income of top 5%: $427,580
• Taxes paid with 2021 tax brackets: $119,805 single, $90,448 married filing jointly
• Taxes paid with Biden tax brackets: $120,496 single, $90,448 married filing jointly
• Taxes paid with 1978 tax brackets: $279,316 single, $265,806 married filing jointly

The top 5% in Washington earn over $425,000, but taxes are high. In 1978, single filers would face a whopping $279,000 tax bill, but for 2021 they only owe a bit under $120,000. The Biden tax plan would increase taxes for single filers by just a few hundred dollars. 

West Virginia

• Average income of top 5%: $272,372
• Taxes paid with 2021 tax brackets: $65,482 single, $47,387 married filing jointly
• Taxes paid with Biden tax brackets: $65,482 single, $47,387 married filing jointly
• Taxes paid with 1978 tax brackets: $170,670 single, $157,160 married filing jointly

West Virginia has the lowest average income in the country for the top 5% percent of earners, at $272,372. As a result, an increase the marginal tax rates proposed by the Biden Administration won’t impair that income at all. 

Wisconsin

• Average income of top 5%: $342,873
• Taxes paid with 2021 tax brackets: $90,157 single, $64,308 married filing jointly
• Taxes paid with Biden tax brackets: $90,157 single, $64,308 married filing jointly
• Taxes paid with 1978 tax brackets: $220,021 single, $206,511 married filing jointly

Earnings for the average top 5% earner in Wisconsin approach don’t trigger much by way of taxes, with singles owing just over $90,000. Compared with 1978, the 2021 tax brackets — along with the proposed Biden tax brackets — would save a single filer an astonishing $130,000 in taxes. 

Wyoming

• Average income of top 5%: $337,144
• Taxes paid with 2021 tax brackets: $88,152 single, $62,933 married filing jointly
• Taxes paid with Biden tax brackets: $88,152 single, $62,933 married filing jointly
• Taxes paid with 1978 tax brackets: $216,011 single, $202,501 married filing jointly

Wyoming joint filers owe about $63,000 in taxes on the average top 5% income of $337,144. This represents savings of about $140,000 over the 1978 tax brackets, even with the proposed Biden Administration tax brackets. 

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Methodology: In order to find out how much the rich would actually pay if they had higher taxes, GOBankingRates first found each state’s (1) average income of the top 5% as sourced from the 2019 American Community Survey conducted by the U.S. Census Bureau. Then, GOBankingRates found the (2) federal income taxes paid by the top 5% under the 2021 federal income tax brackets and (3) federal tax burden for the top 5% under the 2021 tax brackets as sourced from Tax Foundation. GOBankingRates then found the (4) federal income taxes paid by the top 5% under the new President Joe Biden’s proposed federal income tax brackets and (5) federal tax burden for the top 5% under new President Joe Biden’s proposed federal income tax brackets as sourced from Tax Foundation’s “Details and Analysis of President-elect Joe Biden’s Tax Plan”. Finally, GOBankingRates found the (6) federal income taxes paid by the top 5% under the 1978 federal income tax brackets (when the highest tax rate was 70%) and (7) federal tax burden for the top 5% under the 1978 tax brackets as sourced from Tax Foundation. All data was compiled using GOBankingRates’ in-house income tax calculator and using the standard deductions for each year as sourced from Tax Policy Center. All figures are just for federal income tax and were found for both a single person filing and a married couple filing together. All data is up to date as of January 11, 2021.

About the Author

John Csiszar

After earning a B.A. in English with a Specialization in Business from UCLA, John Csiszar worked in the financial services industry as a registered representative for 18 years. Along the way, Csiszar earned both Certified Financial Planner and Registered Investment Adviser designations, in addition to being licensed as a life agent, while working for both a major Wall Street wirehouse and for his own investment advisory firm. During his time as an advisor, Csiszar managed over $100 million in client assets while providing individualized investment plans for hundreds of clients.

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