The Tax Man Cometh and Never Really Leaveth
How much does the average American household pay in Taxes? According to the Bureau of Labor Statistics (BLS), Americans spent as much on taxes in 2021 as food, healthcare, education, and clothing — combined.
The data comes from its report on the spending habits of the average American family, the annual Consumer Expenditure Survey. The most recent numbers show that after housing, taxes account for the largest category of family spending. Other categories include transportation, personal insurance and pensions, entertainment, personal care products and services, reading, tobacco products and smoking supplies, alcoholic beverages, and cash contributions.
But we broke it all down for you in this nifty graphic, in which a $100 bill represents 100% of household spending:
By the way, the BLS doesn’t actually call them “households,” in case you are thumbing through the actual report. Instead, the bureau measures spending by “consumer units,” which consist of families, single persons living alone or sharing a household with others but who are financially independent, or two or more persons living together who share major expenses. We’ll call them households here for our readers’ ease.
According to the 76-page report, on average, each household paid $16,729.73 in taxes in 2021. This included $8,561.46 in federal income tax, $2,564.14 in state and local income taxes, $2,475.18 in property taxes, $5,565.45 in Social Security deductions, and $105.21 in other taxes. The report offsets this amount by an average federal COVID-19 stimulus payment of $2,541.71.
The total average spending per household on food was $8,289.28 (includes both eating at home and eating out), spending on healthcare (health insurance and medical services) came in at $5,451.61, education at $1,226.14, and $1,754.39 on clothing. The combined total of food, healthcare, education, and clothing was $16,721.42.
Housing, the single largest expenditure, came in at $22,623.55 per household. This included mortgage payments, rent payments, and out-of-town lodging. $10,961.18 was spent on transportation, which included vehicle purchases (net outlays), fuel, and public transportation. Entertainment spending, which increased almost 23% over 2020 to $3,567.89 in 2021, included all kinds of things from movie rentals to boat docking fees.
Annual alcohol spending, up 16% from 2020, came in at $553.77 per household. Most of that, according to BLS, was because people went out more in 2021 (“alcohol away from home spending”) as bars and restaurants re-opened after the COVID-19 lockdowns. Similarly, spending on apparel and services (e.g. dry-cleaning and tailoring) increased 22.3% in 2021, compared to a decrease of 23.8% in 2020.