REPORT
Apr. 2016
Tax Freedom Day 2016
is April 24th
By Scott Greenberg
Policy Analyst
Key Findings
·· This year, Tax Freedom Day falls on April 24, or 114 days into the year
(excluding Leap Day).
·· Americans will pay $3.3 trillion in federal taxes and $1.6 trillion in state
and local taxes, for a total bill of almost $5.0 trillion, or 31 percent of the
nation’s income.
·· Tax Freedom Day is one day earlier than last year, due to slightly lower
federal tax collections as a proportion of the economy.
·· Americans will collectively spend more on taxes in 2016 than they will on
food, clothing, and housing combined.
·· If you include annual federal borrowing, which represents future taxes
owed, Tax Freedom Day would occur 16 days later, on May 10th.
·· Tax Freedom Day is a significant date for taxpayers and lawmakers because
it represents how long Americans as a whole have to work in order to pay
the nation’s tax burden.
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©2016 Tax Foundation
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Editor, Melodie Bowler
Designer, Dan Carvajal
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What Is Tax Freedom Day?
Tax Freedom Day® is the day when the nation as a whole has earned enough money to pay
its total tax bill for the year. Tax Freedom Day takes all federal, state, and local taxes and
divides them by the nation’s income. In 2016, Americans will pay $3.34 trillion in federal
taxes and $1.64 trillion in state and local taxes, for a total tax bill of $4.99 trillion, or 31
percent of national income. This year, Tax Freedom Day falls on April 24th, or 114 days into
the year (excluding Leap Day).
What Taxes Do We Pay?
This year, Americans will work the longest to pay federal, state, and local individual income
taxes (46 days). Payroll taxes will take 26 days to pay, followed by sales and excise taxes (15
days), corporate income taxes (9 days), and property taxes (11 days). The remaining 7 days
are spent paying estate and inheritance taxes, customs duties, and other taxes.
Chart 1.
America Will Spend More on Taxes in 2016 than It Will on Food,
Clothing, and Housing Combined
$6,000
In 2016, America will pay 3.3
trillion in federal taxes and $1.6
trillion in state and local taxes,
for a total tax bill of $4.9 trillion,
or 31 percent of national income.
$5,000
Billions of Dollars
2
State and
Local Taxes
$4,000
$3,000
$2,000
$1,000
Housing
Clothing
Federal
Taxes
Food
$0
Source: Bureau of Economic Analysis; Tax Foundation calculations.
TAX FOUNDATION
Why Is Tax Freedom Day Earlier This Year?
@TaxFoundation
Tax Freedom Day is one day earlier than last year. This is due mainly to slightly lower
projected federal tax collections, as a share of the U.S. economy. While federal individual
income tax revenues are expected to rise as a share of the economy, federal corporate,
payroll, and excise tax revenues are projected to fall.
3
When Is Tax Freedom Day if You Include Federal Borrowing?
Since 2002, federal expenses have surpassed federal revenues, with the budget deficit
exceeding $1 trillion annually from 2009 to 2012. In calendar year 2016, the deficit will grow
significantly, to from $592 billion to $698 billion. If we include this annual federal borrowing,
which represents future taxes owed, Tax Freedom Day would occur on May 10th, 16 days
later. The latest ever deficit-inclusive Tax Freedom Day occurred during World War II on May
25, 1945.
When Is My State’s Tax Freedom Day?
The total tax burden borne by residents of different states varies considerably due to
differing state tax policies and the progressivity of the federal tax system. This means a
combination of higher-income and higher-tax states celebrate Tax Freedom Day later:
Connecticut (May 21), New Jersey (May 12), and New York (May 11). Residents of Mississippi
will bear the lowest average tax burden in 2016, with Tax Freedom Day arriving for them on
April 5. Also early are Tennessee (April 6) and Louisiana (April 7).
When Does Tax Freedom Day® 2016 Arrive in Your State?
WA
Apr 27
#40
OR
Apr 24
#37
CA
Apr 30
#45
NV
Apr 21
#30
MT
Apr 17
#20
ID
Apr 15
#16
UT
Apr 21
#30
AZ
Apr 15
#16
WY
Apr 23
#36
CO
Apr 24
#37
NM
Apr 9
#6
ND
Apr 26
#39
SD
Apr 8
#4
VT
Apr 17 #20
MN
Apr 30
#45
NE
Apr 14
#14
KS
Apr 19
#26
OK
Apr 11
#8
TX
Apr 17
#20
AK
Apr 10
#7
WI
Apr 27
#40
NH
Apr 22 #32
NY
May 11
#48
MI
Apr 22
#32
PA
Apr 22
#32
OH
IL
IN
Apr 19
Apr 29 Apr 18 #26
WV VA
#44
#24
Apr 11 Apr 22
MO
#8
Apr 12
#32
KY
#12
Apr 11 #8
NC
Apr 16 #19
TN Apr 6
#2
SC
AR
Apr 11
Apr 13
#8
#12
GA
AL
MS
17
Apr 5 Apr 8 Apr
#20
#4
#1
IA
Apr 14
#14
ME
Apr 15
#16
LA
Apr 7 #3
FL
Apr 20
#29
MA
May 5 #47
RI
Apr 28 #42
CT
May 21 #50
NJ
May 12 #49
DE
Apr 18 #24
MD
Apr 28 #42
DC
Apr 26 (#39)
HI
Apr 19
#26
Note: Each state’s Tax Freedom Day® is the day when taxpayers in the state
have collectively earned enough money to pay their federal, state, and local
tax bill for the year.
Source: Tax Foundation, Tax Freedom Day® 2016.
TAX FOUNDATION
Chart
2.
When Tax Freedom Day Arrives
Earlier
Later
4
How Has Tax Freedom Day Changed over Time?
The latest ever Tax Freedom Day was May 1, 2000; in that year, Americans paid 33 percent
of their total income in taxes. A century earlier, in 1900, Americans paid only 5.9 percent of
their income in taxes, meaning that Tax Freedom Day came on January 22.
Chart 3.
How Has Tax Freedom Day Changed over Time?
Tax Freedom Day, 1900 to 2016
6/8
Deficit Inclusive Tax Freedom Day
5/19
4/29
4/9
Tax Freedom Day
3/20
2/29
2/9
1/20
1/0
1900
1910
1920
1930
1940
1950
1960
1970
1980
1990
2000
2010
2015
Source: Tax Foundation calculations.
TAX FOUNDATION
Methodology
@TaxFoundation
In the denominator, we count every dollar that is officially part of net national income
according to the Department of Commerce’s Bureau of Economic Analysis. In the numerator,
we count every payment to the government that is officially considered a tax. Taxes at all
levels of government—federal, state, and local—are included in the calculation. In calculating
Tax Freedom Day for each state, we look at taxes borne by residents of that state, whether
paid to the federal government, their own state or local governments, or governments of
other states. Where possible, we allocate tax burdens to each taxpayer’s state of residence.
Leap days are excluded, to allow comparison across years, and any fraction of a day is
rounded up to the next calendar day.