What Percentage of the US Make Over $100k?
Uncover the reality of US income distribution. Learn who earns over $100k and the factors shaping these figures.
Understanding income distribution in the United States often sparks curiosity, especially regarding the percentage of the population earning over $100,000. This threshold provides insight into economic landscapes and factors influencing financial well-being.
The Latest Figures
Recent data indicates that approximately 38.9% of U.S. households earned over $100,000 in 2023. For individuals, the percentage is considerably lower; about 15.05% earned over $100,000 annually in 2024. This difference highlights the distinction between individual and household income. The median individual income in 2024 is estimated at $50,200, while the average is higher at $73,472, influenced by higher earners.
Understanding Income Definitions
“Individual income” refers to a single person’s total earnings from various sources. “Household income” combines the earnings of all individuals aged 15 and older living in the same household, including wages, salaries, self-employment income, and investment returns. This distinction is significant because a household may reach the $100,000 threshold through multiple earners, even if no single individual earns that amount alone.
Income figures are often reported as either gross income or adjusted gross income (AGI). Gross income represents total earnings before any taxes or deductions. Adjusted gross income is derived by subtracting permissible deductions, such as contributions to traditional Individual Retirement Accounts (IRAs) or student loan interest, before calculating tax liability. While gross income captures the total money earned, AGI is frequently used for tax purposes and to determine eligibility for various tax credits and deductions. Typical income sources include wages, salaries, business income, investment income, and retirement income such as pensions and Social Security benefits.
Key Factors Shaping Income Levels
Educational attainment plays a significant role, as higher levels of education often correlate with greater earning potential. Many with graduate degrees are among higher income earners. Occupation and industry also contribute, with sectors like technology, finance, and healthcare generally offering higher compensation.
Geographic location is another important determinant, as wages and the cost of living vary across different regions. Urban areas or specific states tend to have higher average incomes but also higher expenses. Age and professional experience typically lead to increased earning potential, with individuals often reaching their peak earning years between ages 35 and 44. For household income, the number of working adults directly impacts the total income.
How Income Data Is Collected
Income data in the United States is primarily collected by federal agencies like the U.S. Census Bureau and the Internal Revenue Service (IRS). The Census Bureau utilizes surveys such as the American Community Survey (ACS) and the Current Population Survey (CPS). The ACS collects detailed demographic, social, economic, and housing information annually from a large sample, providing insights into income distribution. The CPS, a monthly survey, focuses on employment, unemployment, and earnings, with its Annual Social and Economic Supplement (ASEC) providing comprehensive income and poverty data.
The IRS collects income information through mandatory tax filings, specifically from Form 1040, which details reported amounts and sources of income. While these sources provide extensive data, limitations exist. These include potential underreporting of income in surveys, particularly by high earners. Additionally, survey data typically reflects pre-tax income and may not fully account for non-cash benefits or the impact of taxes and transfers on disposable income.