Real Estate: 1031 Exchange Examples

Woman working on a 1031 exchangeWhen investors want to diversify their portfolios, they often consider real estate. But if you’re interested in real property, you need to know the ins and outs of purchasing and selling. One method many investors rely on is called a 1031 exchange. By following the rules for this type of exchange, investors can defer their capital gains tax while working towards better and bigger properties. Understanding how a 1031 exchange works is crucial to its success, though. Here are a few example scenarios to help you get familiar with it.

Taxes and real estate can get confusing. Consider working with a financial advisor as you work to make sure your real estate investing is as tax efficient as possible.

What Is a 1031 Exchange?

A 1031 exchange is a tax-deferment strategy often used by real estate investors. In this process, the owner of an investment property (or multiple) sells their original property and buys a like-kind property as a replacement. By following the IRS’s rules during this procedure, they defer capital gains tax.

A like-kind property exchange doesn’t mean you need to swap the exact same type of building. They also don’t need to share the same quality, only their character or class. For instance, a vacant lot is like-kind with a real property improved with a rental building. You can tailor your exchange to meet your goals and needs as long as it meets the requirements laid out in Section 1031. However, investors should note that real estate within the U.S. cannot be like-kind with any property outside the country.

The process also requires the use of certain channels. Namely, you need an exchange facilitator. According to the IRS, this is a “qualified intermediary, transferee, escrow holder, trustee or other person that holds exchange funds for you in a deferred exchange” under the applicable terms.

There are also four different types of 1031 exchanges: simultaneous exchange, delayed 1031 exchange, reverse exchange and improvement exchange.

1031 Exchange Examples

A 1031 exchange requires you to fulfill two crucial rules.

First, there is a minimum value requirement. The new property, or properties, must have a purchase price equal to or more than the amount you sold your real estate for. So, if you sell your property for $600,000, then you must buy a replacement property worth at least that much.

The second requirement applies to financing. Essentially, anyone with a loan on their original property must carry the same amount of debt or more with the replacement property.

Here are some examples to illustrate how a 1031 exchange works.

Example 1: The Basics

Tax payer preparing to pay capital gains taxSuppose you are a real estate investor. You choose to sell your current property with a $150,000 mortgage on it. It sells for $650,000. If you want to meet the conditions for a 1031 exchange, you much purchase a replacement property for at least $650,000. In addition, you need to borrow a minimum of $150,000 to pay for it.

Sounds straightforward, right? But we all know the real world is a little more complicated than this. The following examples show you how the situation may change.

Example 2: Higher Value Replacement

It’s unlikely you’ll find a replacement selling for exactly the same amount as your original property. With that in mind, let’s say you sell your property with a $300,000 mortgage on it for $500,000.

While searching for a replacement, you find a property you want to buy. But it’s valued at $700,000. In that case, you contribute $200,000 out of pocket and purchase the replacement with a $300,000 loan and $400,000 of cash. Like this, you can still defer taxes since you satisfy the two basic requirements.

Example 3: Increased Leverage

One concept in real estate is known as leveraging. Basically, it means using debt, such as a loan, to buy an asset, like property. Investors can increase their leverage using a 1031 exchange, allowing them to invest in a higher-value property. As a result, they can not only improve their cash flow but multiply the rate they build equity at.

So, suppose you sell one of your first investment properties for $500,000. You still owed $100,000 on the mortgage at the moment of sale. But you want to set your sights higher. As a result, you move to purchase a property that costs $1 million.

You use the total profit from the sale at $400,000 and take out a new loan worth $600,000. With this, you meet the 1031 exchange requirements.

Example 4: Partial 1031 Exchange

It’s actually possible to sell an investment property and satisfy the 1031 exchange rules without using all of your sale proceeds. This is called a partial exchange. However, buying a replacement for a lower cost than the original property’s sale price or taking out less financing will result in taxes.

For instance, we’ll say you sell your original property for $650,000. It had a $200,000 mortgage leftover. You then purchase a property for $500,000 but still take out $200,000 for the loan. The $150,000 in profit unused becomes taxable income.

Essentially, you still defer taxes on the better part of the sale from the first property. But the money that you didn’t put into the replacement still faces capital gains tax or depreciation recapture.

The Takeaway

Aerial view of a plot of real estate

A 1031 exchange comes with a few advantages, including deferring capital gains tax, expanding your portfolio and more control during the sale of property. And the way you go about your exchange can vary depending on your goals and needs. Before pursuing a 1031 exchange, research the requirements in depth and consider speaking to a financial advisor. Similarly, any investors interested in real estate should do the same. A financial professional can guide you through the rules and consequences which could impact your future investments.

Tips for Investing 

  • Many investors use real estate, whether through REITs or physical property, to diversify their portfolios. However, you may want guidance before you change your investing strategy. If so, consider speaking with a financial advisor. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • You may already be making strides to reach your retirement savings goals, complete with a strategized investment portfolio. Perhaps you even have an emergency fund safety cushion prepared for sudden changes. But maybe it’s time to diversify, earn greater returns or a passive income. In that case, real estate might be your golden ticket. Just research the historical trends and expected performance beforehand.
  • Most advisors recommend having a diversified portfolio. Adding real estate can offer additional diversification and non-correlated assets to your portfolio. Our asset allocation calculator can help you determine how much of your portfolio to invest in real estate.

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A Guide For Victims Of Tax Related Identity Theft

Being a victim of tax related identity theft can leave you scrambling to take the proper steps to set things right. Here’s are the things you need to do.

The post A Guide For Victims Of Tax Related Identity Theft appeared first on Bible Money Matters and was written by Peter Anderson. Copyright © Bible Money Matters – please visit for more great content.


Here’s a Trick to Take Control of Your Taxes in an Unpredictable Real Estate Market

Real estate investors discussing a reverse 1031 exchangeMost real estate investors are familiar with traditional tax-deferred exchanges. They require you to sell your current business property before you can purchase another. However, there’s an alternative route that allows you to take some extra control in the unpredictable real estate market. A reverse 1031 exchange is a tax-deferred method that provides a variety of potential benefits. But it requires a careful strategy and knowledge of legal guidelines. Here’s what you need to know about them before diving in.

Consider working with a financial advisor as you seek ways to handle real estate matters in a way that minimizes taxes. 

What Is a Reverse 1031 Exchange?

A reverse exchange is a maneuver that investors employ in real estate. This type of property exchange involves purchasing a replacement property before selling or trading the currently owned property. The investor must sell or transfer that original property, though, since owning both at the same time (or a “pure” reverse exchange) is not allowed.

But there are other types of 1031 exchanges as well. For example, there is the most common form, called “forward 1031 exchange.” Otherwise known as a like-kind exchange, delayed exchange or starker exchange, it describes selling and closing the original property before finalizing the purchase of a new property. There is also:

  • Simultaneous exchange: when you purchase the replacement property and sell the current property at the same time.
  • Delayed build-to-suit exchange: when you replace the current property with a new property built to match the investor’s needs.
  • Delayed/Simultaneous built-to-suit exchange: when you buy the built-to-suit property before transferring the current property.

Reverse exchanges solely apply to Section 1031 property, which usually must be investment or business property. The regulation may also apply to a previous primary residence or vacation home, but only when meeting very specific conditions.

However, while you can expedite the process, you can’t take ownership of the replacement property immediately. You have to complete the entire transaction first. Until the sale of the relinquished property, an intermediary called the exchange accommodation titleholder (EAT) must hold the property. Parking the property with an EAT is called a qualified exchange accommodation arrangement (QEAA).

Structure of a Reverse 1031 Exchange

There are two ways you can format your reverse 1031 exchange. They are:

Exchange First Reverse 1031 Exchange

In this case, the EAT takes the title of the relinquished property before the investor purchases the replacement. The price is based on the estimated fair market value; however, the investor provides the funds to the EAT. But you maintain control over the property when you sign a QEAA and lease.

The EAT then also takes possession of the replacement property.

Within 180 days of the EAT taking the replacement property’s title, you must close the relinquished property’s sale. You then receive these proceeds as reimbursement for the funds you gave to the EAT to buy the relinquished property.

Exchange Last Reverse 1031 Exchange

Here, the EAT takes possession of the replacement property as soon as you close on the purchase. You provide the funds to do so, although the EAT is named the borrower on any financing.

Within 180 days of this purchase, a qualified intermediary sells the relinquished property on your behalf. Then the sale proceeds are used to buy the replacement property from the EAT.

Afterward, the EAT transfers the replacement property title to you, and the qualified intermediary transfers the relinquished property sale proceeds to the EAT. Finally, the EAT uses said funds to pay off any existing debt from the replacement property purchase.

1031 Exchange Time Periods

Generally, an exchange occurs when you swap one property for another. But it’s not easy to locate the exact type of property you want, which can mean delays. Two timing rules apply to the 1031 exchange, though.

The first is the 45-day rule. Once you sell your property, you need to identify the replacement to your intermediary within 45 days. It should be in writing and detail the property you want. Investors can designate three properties as long as they choose one to purchase. It’s possible to designate more than the base three sometimes, although it depends on their valuation.

The second is the 180-day rule. Simply, you must close on your new property within 180 days of the old property’s sale.

Reverse Exchange Key Timing Considerations

Tax documents, calculator and model of a houseSo, the timeline for reverse exchanges mirrors the deadlines used in a deferred exchange. If you fail to meet the 45- and 180-day deadlines, you don’t lose or disqualify the transaction. However, you will no longer be able to enjoy the benefits available through the presumption of the safe harbor. Anyone participating in a reverse 1031 exchange needs to keep these time period tweaks in mind:

  • 45-Day Deadline: The exchanger must communicate with the EAT in writing and identify the properties that may be relinquished. This is done prior to or on the 45th day following the EAT’s acquisition of the target property.
  • 180-Day Deadline: The EAT must transfer the replacement property to the exchanger, or the current, relinquished property to a third party. This must be done on or prior to the 180th day after the EAT acquires the target property.
  • Concurrent Deadlines: Both the above deadlines run at the same time. Also, the 180-day parking period (exchange last reverse) and the 180-day exchange period are independent of each other. 

Like-Kind Property in a Reverse Exchange

Section 1031 of the IRC requires any investment real estate involved in a 1031 exchange to be “like-kind.” According to the IRS, like-kind exchanges are “real property used for business or held as an investment [exchanged] solely for other business or investment property that is the same type.” So, its character defines it rather than its grade or quality.

The range of exchangeable real estate is broad as a result. For example, you can exchange vacant land for a commercial building. However, you can’t swap real estate for another tangible asset, such as gold or artwork. Usually, exchangers must have owned the property for a minimum of two years. Finding a replacement property with equal or greater value will also help you receive the full benefit of your 1031 exchange.

Purchasing a property with lesser market value incurs taxes on the remaining income made from the relinquished property sale.

There are three rules that you can use to designate your replacement property. They are:

  • The three-property rule: identify three properties for possible purchase, no matter their market value.
  • The 200% rule: identify any number of properties for replacement as long as their total fair market value does not exceed 200% of the relinquished property’s fair market value.
  • The 95% rule: identify any number of properties up to and over 200% of the relinquished property’s value, but only if the exchanger acquires at least 95% of the total identified properties’ value.

Reverse 1031 Exchange: Pros and Cons

Reverse 1031 exchanges may help or hurt your real estate investment strategy. Keep these factors in mind before you start planning.

Advantages of a Reverse 1031 Exchange

The main appeal of a reverse 1031 exchange is the safe harbor that the IRS created with Revenue Procedure 2000-37. It requires the exchanger to park the replacement property with the EAT. Because of this, they are the legal owner, which opens up a list of tax benefits, also known as safe harbor arrangements.

Additionally, following the required guidelines (i.e., hiring a qualified intermediary, purchasing a like-kind property, etc.) makes the investor eligible for tax deferral. This applies to the sales income made from the relinquished property.

However, there are other benefits to this strategy worth considering. For example, the real estate market can be volatile and subject to rapid changes. A reverse 1031 allows you to lock in a replacement property at a time and price that suits you. It also gives you more control over your own closing price when you list the relinquished property after purchasing the replacement.

Challenges of a Reverse 1031 Exchange

Man holding the digital image of a house in his handReverse 1031 exchanges are more complex than forward 1031 exchanges and thus require more careful planning. For example, one of the most difficult challenges comes with financing. Securing a loan in a tight credit market can be difficult. You might not have access to cash to help you make the exchange quickly, and working with a lender creates restraints. And if you don’t sell within the 180-day deadline, then both assets are owned.

Missing the 180-day deadline also costs you any favorable tax treatment. You’ll have to pay capital gain taxes.

It can be more costly than a deferred exchange, too. Your state may require a transfer tax when conveying the property title to and from the EAT as well. Some states view the EAT’s position as an agent of the exchanger, in which case they do not apply the tax. However, each location is different. Multiple closings also contribute to higher costs as well as service fees.

The Takeaway

Reverse 1031 exchanges are a valuable tool to have in a real estate investor’s back pocket. They allow you to purchase your replacement property before selling the one you currently hold. But they’re a complex strategy, which can incur additional expenses if you’re not careful. Speaking with a tax advisor and knowledgeable qualified intermediary will help you navigate this process. They can guide you through the rules applicable to you as a taxpayer.

Tips for Real Estate Investing

  • Real estate is a valuable way to diversify and strengthen your portfolio. However, it also comes with a range of risks. Talking to a financial advisor before you start planning will help you mitigate potential losses. Finding the right one is easy with SmartAsset’s free matching tool. It matches you with local professionals in only minutes. If you’re ready to revise your investment strategy, get started now.
  • If you’re interested in broadening your investment horizons, you may also need to revisit your asset allocation. Finding the right balance can help you ensure your strategy matches your risk tolerance. Check out our asset allocation calculator to review your current portfolio.

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2021 Capital Gains Tax Rates by State

Image shows a post-it on a desk, next to a desk plant, calculator and other office supplies. The post-it reads, "Tax Time." It's important to understand capital tax rates in your state when going over investment taxes.

Investors must pay capital gains taxes on the income they make as a profit from selling investments or assets. The federal government taxes long-term capital gains at the rates of 0%, 15% and 20%, depending on filing status and income. And short-term capital gains are taxed as ordinary income. Some states will also tax capital gains. A financial advisor could help you figure out your tax liability and create a tax plan to maximize your investments. Let’s break down how capital gains are taxed by state in 2021.

Capital Gains Tax Overview

Capital gains vary depending on how long an investor had owned the asset before selling it. Long-term capital gains come from assets held for over a year. Short-term capital gains come from assets held for under a year.

Based on filing status and taxable income, long-term capital gains for tax year 2021 will be taxed at 0%, 15% and 20%. Short-term gains are taxed as ordinary income.

After federal capital gains taxes are reported through IRS Form 1040, state taxes may also be applicable.

States That Don’t Tax Capital Gains

The following states do not tax capital gains:

  • Alaska
  • Florida
  • New Hampshire
  • Nevada
  • South Dakota
  • Tennessee
  • Texas
  • Washington
  • Wyoming

This is because these nine states do not have an income tax. Tennessee and New Hampshire specifically tax investment income (including interest and dividends from investments) only, but not wages.

States That Tax Capital Gains

A majority of U.S. states have an additional capital gains tax rate between 2.9% and 13.3%. The rates listed below are either 2021 or 2020 rates, whichever are the latest available.

States With the Highest Capital Gains Tax Rates

The 10 states with the highest capital gains tax are as follows:


California taxes capital gains as ordinary income. The highest rate reaches 13.3%


Hawaii taxes capital gains at a lower rate than ordinary income. The highest rate reaches 11%


Taxes capital gains as income and the rate reaches 8.53%.


Taxes capital gains as income. The rate reaches 7.15% at maximum.


Taxes capital gains as income and the rate reaches a maximum of 9.85%.

New Jersey

New Jersey taxes capital gains as income and the rate reaches 10.75%.

New York

New York taxes capital gains as income and the rate reaches 8.82%.


Oregon taxes capital gains as income and the rate reaches 9.9%.


Vermont taxes short-term capital gains as income, as well as long-term capital gains that a taxpayer holds for up to three years. They are allowed to deduct up to 40% of capital gains (at a maximum of $350,000 and not exceeding 40% of federal taxable income) on long-term assets held over three years. The capital gains tax rate reaches 8.75.


Wisconsin taxes capital gains as income. Long-term capital gains can apply a deduction of 30% (or 60% for capital gains from the sale of farm assets). The capital gains tax rate reaches 7.65%.

Capital Gains Tax Rates in Other States

Image shows and calculator and charts that could be used to understand how tax rates differ by state.

As for the other states, capital gains tax rates are as follows:


Taxes capital gains as income and the rate reaches 5%


Taxes capital gains as income and the rate reaches 4.5%


Taxes capital gains as income and the rate reaches around 6%.


Colorado taxes capital gains as income and the rate reaches 4.63%.


Connecticut’s capital gains tax is approximately 7%.


Taxes capital gains as income and the rate reaches 6.6%.


Taxes capital gains as income and the rate reaches 5.75%.


Idaho axes capital gains as income. The rate reaches 6.93%.


Taxes capital gains as income and the rate is a flat rate of 4.95%.


Taxes capital gains as income and the rate is a flat rate of 3.23%.


Kansas taxes capital gains as income. The rate reaches 5.70% at maximum.


Taxes capital gains as income. The rate is a flat rate of 5%.


Taxes capital gains as income. The rate reaches 6%.


Taxes capital gains as income and the rate reaches 5.75%.


Taxes capital gains as income. Long-term capital gains are usually taxed at a flat rate of about 5% but there are some types of capital gains that the state taxes at 12%.


Taxed as income and at a flat rate of 4.25%.


Taxed as income and reaches 5%.


Taxed as income and the rate reaches 5.4%.


Taxed as income and the highest income tax rate is 6.90%, but with a 2% capital gains credit, this rate is technically 4.9%.


Taxed as income and the rate reaches 6.84%.

New Mexico

The state taxes capital gains as income (allowing a deduction of 40% of capital gains income or $1,000, whichever is higher) and the rate reaches 5.9%.

North Carolina

Taxed as income and at a flat rate of 5.25%.

North Dakota

Taxed as income (with a deduction allowed of 40% of capital gains income) and the rate reaches 2.9%.


Taxed as income and the rate reaches 4.8%.


Taxed as capital gains and the rate reaches 5%. There is a 100% capital gains deduction available for income from particular kinds of investments.


Taxed as capital gains income at a flat rate of 3.07%.

Rhode Island

Taxed as capital gains income and reaching 5.99%.

South Carolina

South Carolina taxes capital gains as income (with a 44% deduction available on long-term gains) and the rate reaches 7%.


Taxes capital gains as income at a flat rate of 4.95%.


Virginia taxes capital gains as income with the rate reaching 5.75%.

West Virginia

The state taxes capital gains as income. The rate reaches 6.5%.

Bottom Line

Image shows a person sitting at their laptop and researching tax topics such as capital gains tax rates by state.

Capital gains taxes can be tricky when investing, especially when you have to figure out both federal and state taxes. Be sure to understand whether your state taxes capital gains – and to what extent – before filing your tax return.

Tips for Navigating Tax Planning

  • Need help finding a financial advisor? SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • You might be interested in signing up for a robo-advisor. Many robo-advisors offer tax-loss harvesting, which sells investments that are hurting your portfolio and helps offset what you earn from the gains. Robo-advisors aren’t necessarily right for everyone, but if you’re starting your investment journey or you don’t have complicated assets, you may want to give it a try. If you’re unsure, find one that offers you the chance to talk to a financial professional if you have questions about your specific needs. Not all robo-advisors offer this perk, but some do, usually for a fee.

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Effective tax rates in the United States

I messed up! Despite trying to make this article as fact-based as possible, I botched it. I’ve made corrections but if you read the comments, early responses may be confusing in light of my changes.

For the most part, the world of personal finance is calm and collected. There’s not a lot of bickering. Writers (and readers) agree on most concepts and most solutions. And when we do disagree, it’s generally because we’re coming from different places.

Take getting out of debt, for instance. This is one of those topics where people do disagree — but they disagree politely.

Hardcore numbers nerds insist that if you’re in debt, you ought to repay high-interest obligations first. The math says this is the smartest path. Other folks, including me, argue that other approaches are valid. You might pay off debts with emotional baggage first. And many people would benefit from repaying debt from smallest balance to highest balance — the Dave Ramsey approach — rather than focusing on interest rates.

That said, some money topics can be very, very contentious.

Any time I write about money and relationships (especially divorce), I know the debate will get lively. Should you rent a home or should you buy? That question gets people fired up too. What’s the definition of retirement? Should you give up your car and find another way to get around?

But out of all the topics I’ve ever covered at Get Rich Slowly, perhaps the most incendiary has been taxes. People have a lot of deeply-held beliefs about taxes, and they don’t appreciate when they read info that contradicts these beliefs. Chaos ensues.

Tax Facts

When I do write about taxes — which isn’t often — I try to stick to facts and steer clear of opinions. Examples:

  • The U.S. tax burden is relatively low when compared to other countries.
  • The U.S. tax burden is relatively low when compared to U.S. tax burdens in the past.
  • Overall, the U.S. has a progressive tax system. People who earn more pay more. That said, certain taxes are regressive (meaning that, as a percentage of income, low earners pay more).
  • A large number of Americans (roughly one-third) pay no federal income tax at all.
  • Despite fiery rhetoric, no one political party is better with taxing and spending than the other. The only period during the past fifty years in which the U.S. government had a budget surplus was 1998-2001 under President Bill Clinton and a Republican-controlled Congress.

Even when I state these facts, there are people who disagree with me. They don’t agree that these are facts. Or they don’t agree these facts are relevant.

Also, I sometimes read complaints that the wealthy are taxed too much. To make their argument, writers make statements like, “The top 50% of taxpayers pay 97% of all federal income taxes.” While this statement is true, I don’t feel like it’s a true measure of where tax burdens fall.

I believe there’s a better, more accurate way to analyze tax burdens.

Effective Tax Burden

To me, what matters more than nominal tax dollars paid is each individual’s effective tax burden.

Your effective tax burden is usually defined as your total tax paid as a percentage of your income. If you take every tax dollar you pay — federal income tax, state income tax, property tax, sales tax, and so on — then divide this total by how much you’ve earned, what is that percentage?

This morning, while curating links for Apex Money — my second personal-finance site, which is devoted to sharing top money stories from around the web — I found an interesting infographic from Visual Capitalist. (VC is a great site, by the way. Love it.) They’ve created a graphic that visualizes effective tax rates by state.

Here’s a summary graph (not the main visualization):

State effective tax rates

As you can see, on average the top 1% of income earners in the U.S. have a state effective tax rate of 7.4%. The middle 60% of U.S. workers have a state effective tax rate of around 10%. And the bottom 20% of income earners (which Visual Capitalist incorrectly labels “poorest Americans” — wealth and income are not the same thing) have a state effective tax rate of 11.4%.

Tangent: This conflation of wealth with income continues to grate on my nerves. I’ll grant that there’s probably a correlation between the two, but they are not the same thing. For the past few years, I’ve had a low income. I’m in the bottom 20% of income earners. But I am not poor. I have a net worth of $1.5 million. And I know plenty of people — hey, brother! — with high incomes and low net worths.

It’s important to note — and this caused me confusion, which meant I had to revise this article — that the Visual Capital numbers are for state and local taxes only. They don’t include federal income taxes. (Coincidentally, I made a similar mistake a decade ago when writing about marginal tax rates. I had to make corrections to that article too. Sigh.)

GRS readers quickly helped me remedy my mistake, pointing to the nonprofit Tax Foundation’s summary of federal income tax data. With a bit of detective work, I uncovered this graph of federal effective tax rates by income from the Peter G. Peterson Foundation. (Come on. What parent names their kid Peter Peterson? That’s mean.)

Federal effective tax rates

Let’s put this all together! According to the Institute on Taxation on Economic Policy, this graph represents total effective tax rates for folks of various income levels. Note that this graph is explicitly comparing projected numbers in 2018 for a) the existing tax laws (in blue) and b) the previous tax laws (in grey).

TOTAL effective tax rates in the U.S

Total Tax Burden vs. Total Income

Here’s one final graph, also from the Institute on Taxation and Economic Policy. This is the graph that I personally find the most interesting. It compares the share of total taxes paid by each income group to their share of the country’s total income.

Tax burden vs. total income

Collectively, the bottom 20% of income earners in the United States earned 3.5% of total income. They paid 1.9% of the total tax bill. The top 1% of income earners in the U.S. earned one-fifth of the nation’s total personal income. They paid 22.9% of total taxes.

Is the U.S. tax system fair? Should people with high incomes pay more? Do they pay more than their fair share? Should low-income workers pay more? Are we talking about numbers that are so close together that it doesn’t matter? I don’t know and, truthfully, I don’t care. I’m concerned with personal finance not politics. But I do care about facts. And civility.

The problem with discussions about taxation is that people talk about different things. When some folks argue, they’re talking about marginal tax rates. Others are talking about effective tax rates. Still others are talking about actual, nominal numbers. When some people talk about wealth, they mean income. Others — correctly — mean net worth. It’s all very confusing, even to smart people who mean well.

Final Note

Under the Digital Accountability and Transparency Act of 2014, the U.S. Department of the Treasury was required to establish a website — — to provide the American public with info on how the federal government spends its money. While the usability of the site could use some work, it does provide a lot of information, and I’m sure it’ll become one of my go-to tools when writing about taxes. (I intend to update a couple of my older articles this year.)

U.S. federal budget

The USA Spending site has a Data Lab that’s currently in public beta-testing. This subsite provides even more ways to explore how the government spends your money. (I also found another simple budget-visualization tool from Brad Flyon at Learn Forever Learn.)

Okay, that’s all I have for today. Let the bickering begin!


Things to Consider When Moving From a House to an Apartment

Moving from a house to an apartment has its perks and its challenges – and planning your move strategically can help with the latter! Whether you’re looking for a fresh start in a new town or moving cross-country for school, there are several things to consider as you downsize to an apartment. 1. Measure your […]

The post Things to Consider When Moving From a House to an Apartment appeared first on Apartment Life.