How Much Money Do The Top Income Earners Make?

Ever wonder how much money do the top income earners make? Once you know how much the top income earners make, then you can better shoot to be a top income earner yourself. After all, everything is relative when it comes to money.

Americans are rich by world standards. With a median household income of roughly $76,000, America consistently ranks in the Top 20 richest countries in the world. Many of the world’s top income earners live right here in our great country. Just being born into a rich country makes us very lucky.

Other rich countries that have a higher GDP per capita than America include Liechtenstein ($139K), Qatar, Monaco, Macau, Luxembourg, Bermuda, Singapore, Isle of Man, Brunei, Ireland, Norway, Falkland Islands, UAB, S. Maarten, Kuwait, and Gibraltar. Countries with similar GDP per capita to America include Hong Kong, Switzerland, and Saudi Arabia.

If at birth, you had the mental capacity to choose where you’d like to live for most of your life, living in a top 20 richest country will more than likely help you become a top income earner as well.

Even if you end up being the most mediocre producer, you are still miles ahead of much of the world. Too bad many of us can’t pick where we want to grow up and earn a living. As such, it’s nice to understand how we compare against the rest of the world to give us some perspective.

Let’s take a look at what the top income earners make in America. Once you know the income figures, you can then strategize on how to get there.

What The Top 1%, 5%, 10%, 25%, and 50% Income Earners Make

Based on the Internal Revenue Service’s database, here’s how much the top Americans make for 2023. These are estimates due to rising inflation. Since the previous financial crisis in 2008 – 2009, the top 10% have significantly widened the wealth gap.

• Top 1%: $500,000+
• Top 5%: $180,000+
• Top 10%: $130,000+
• Top 25%: $80,000+ $67,280
• Top 50%: >$40,000

The rich have gotten much richer during the pandemic. Therefore, the top income earners are making even more than ever before. Sadly, the wealth gap has widened as we continue through a K-shaped recovery.

Summary Of Top Income Earners Tax Data

Here is data from the IRS that highlights what the top income earners made back in 2015. A top income earner is considered someone who makes a top 10%, top 5%, and top 1% income. Notice how much the top income earners are making today, partially thanks to inflation.

There is not a lot of data about the mega-rich, those in the top 0.1%. However, I also write a huge post highlighting people who make over $1 million a year and how.

Based on a previous 1000+ survey study on Financial Samurai in Fall 2020, about 80% of readers are in the Top 25% income earners ($67,000+). Good to know that many of you are doing well.

The table also tells us a number of things about equality or inequality, namely that the top 1% of tax payers pay 38% of all income taxes yet only have a 20% share of total AGI.

Further, the top 50% of tax payers pay practically all of the nation’s federal taxes (97.3%) while commanding 87.25% of total AGI. This table from the IRS is the source for the often politically bantered argument that 47% of American income earners pay zero federal income taxes.

If you do another little exercise and compare the top 25% of American income to the Top 10 per capita income countries in the world, you can once again see how lucky most of us are.

Broaden Tax Collection Beyond Just The Top Income Earners

If only we could get all American wage earns to pay some taxes. It would go a long way to help shoring up our budget. Congress constantly holds the nation hostage by bickering over whether to cut $10 billion here, $50 billion there. All we have to do is encourage those who earn above the poverty line to pay some tax. We’d raise billions a year right there for example!

Let’s have everyone contribute to the welfare of our country. We are all in this together! For those who are just struggling to keep their heads above water, let’s lend them a helping hand.

The top 1% income earner in 2023 is now earning at least $500,000 a year. But in some states, like Connecticut, the top income earners make over $580,000 a year.

Who Are The Majority Who Pay No Federal Income Taxes?

Back around 2015, roughly 47% of Americans pay no income taxes. In 2022, roughly 60% of working Americans didn’t pay any federal income taxes, largely due to the pandemic. As the pandemic becomes endemic, the likelihood is that more Americans go back to work, make more money, and pay more taxes.

The Americans who pay no income taxes fall into three groups:

The working poor. The earned income tax credit and the child credit can help families making $50,000 or more pay no taxes or get money back. About 60% of those not paying income taxes do contribute to payroll taxes. Meaning they must have some source of earned income.

The elderly. An increased standard deduction for those over 65, and an exemption on part of Social Security earnings, means that many older Americans pay no income taxes. Please remember though that the elderly have paid their dues through decades worth of federal taxation during their careers.

The low-income. A family of four claiming only the standard deduction and personal exemptions pays no federal income tax on its first ~$26,000 of income. The standard deduction per person is now $12,550 in 2021. Further, each family gets a $500 child tax credit.

Not Everybody Has The Ability To Make A Top Income

As you can see, being poor or elderly likely means you don’t pay net federal income taxes. We’re all going to grow old one day, so let’s give this group a pass. The elderly paid into the system, so let’s take care of them. I don’t think any of us would rather be poor so we can pay no federal taxes. Therefore, let’s give them a pass too.

This leaves us with a low-income group that may have made some suboptimal decisions. Some of these decisions include having children while not being able to support themselves. Children are estimated to cost roughly $250,000 from the ages of 1-18. Perhaps having multiple children on a low income is not ideal. But, how do you deny passion?

Living In America Is Rich

If you work in America, you can see from a top down and bottoms up perspective you’re doing fantastic. If you are in the bottom 50% of Americans who earn less than $33,048 a year, know that you can earn more if you want to.

Part of battle to making more money is moving to areas where there are more opportunity. Earning a top one percent income for your age is a numbers game that also requires a lot of luck.

Billions of dollars are flowing through cities like San Francisco due to technology innovation. It’s not like you have to brave the high seas to reach America to get rich. It’s not like you need to ride a horse for three months to get from New York to California. All you’ve got to do is hop on a bus or a plane to be where the action is.

25 years ago, I remember making $550 a month working at McDonald’s for $3.75/hour. With wages 3X higher now, I’d be pulling in $1,650 a month or $20,000 a year! Heck, tack on driving for Uber for 20 hours a week part-time at $36/hour. You’ll make another $2,000 a month and be in the top 50% of income earners no problem.

There’s an entire gig economy out there for freelancers to make extra money after work, or freelance full time. Why not take advantage to become a top income earner yourself?

Top Income Earners Still Experience Stress And Anxiety

Despite earning a top income for your age group, you might still feel anxiety, especially if you have children. The reason why is that your income is dependent on effort. The minute you stop working, your income drops, hence the importance of generating passive income.

Another reason for general angst and anxiety, despite earning a top income, is the fear of downward mobility for your children. Given your income is so high, chances are also high your children won’t make a similar level of income.

As a result, your goal may be to strive for generational wealth to help your children maintain the same lifestyle in adulthood. However, to accumulate generational wealth, often defined as at least $5 million to pass down to your children, will require an enormous amount of effort.

Please Put In The Work To Grow Your Income And Wealth

If you are only working 40 hours a week or less and complaining why you can’t get ahead, you need to seriously re-evaluate your work ethic and expectations. Anybody can do it. You just can’t be delusional enough to think that you’ll be able to compete when everybody in the world who wants to get ahead is working 60+ hours a week and getting paid much less to boot!

Spend some time online understanding global wages from our biggest competitors in China and India. In order to maintain our incomes, we must constantly be updating our skills.

There are plenty of six figure jobs out there for the taking. You just need to have the desire, motivation, work ethic, and perseverance to get there. Did you know the San Francisco police chief makes $320,000 a year? Further, when he retires, he’ll get a $200,000 a year pension for life! It’s not just doctors, lawyers, venture capitalists, bankers, movie stars and athletes who make healthy sums of money.

A Variety Of Jobs Pay Well

Even my friend who is a union electrician makes $120,000 a year. He also gets a $5,000 a month pension when he retires at 55. What’s more, he isn’t allowed to work more than 35 hours a week. Let’s not count the $30,000 a year he makes doing side jobs with all that free time. There are six figure earners in practically every single industry, including the non-profit industry!

Back to my point where if everybody earns a million dollars a year, nobody is rich. Living in San Francisco, it certainly feels like most are in the top 5% of income earners ($159,619). Train janitors and elevator technicians in the Bay Area can make over $250,000 a year with overtime.

I’m sure many who live and work in Manhattan, and potentially LA and Chicago feel the same way. The cost of living is expensive out here, and that’s predominantly driven by high wages.

Combine two income earners with these amounts, and you can really start understanding why surpassing what the government deems as wealthy ($250,000) is not too difficult. Thankfully in 2022+, President Biden only wants to raise taxes on households making over $400,000 a year.

In fact, I argue that in many of the larger cities in America, you’ve got to earn closer to $300,000 a year just to live a middle class lifestyle. It sounds crazy. But it’s true if you take a careful look at the budget I put together. A middle-class lifestyle means owning a home, being able to raise two kids, and save for retirement.

The Top Income Earners Pay The Most Taxes

The top 1% of income earners will likely continue to pay a higher percentage share of overall income taxes than their share of income justifies. If things were fair, the top 1% would only have to pay 20% of total income taxes since 20% is their share of total income. Alas, the rich pay almost double what they owe.

Therefore, it’s not worth constantly demonizing the rich for “not paying their fair share.” The rich donate the most and employ the most people.

On the flip side, the bottom 50% who earn 12.75% of total earnings only pay 2.7% in total taxes. But, as we learned above, most of the bottom 50% are elderly or poor. Nobody is asking the bottom 50% to pay more taxes.

It’s impossible to create a fair tax system that everybody will agree on. But we can look at the data to understand who is making the most and least income. We can see who is paying the most and least in taxes.

It’s great to be a top income earner. However, it’s even greater to be happy. Find your balance!

Here are three things top income earners do below.

Top Income Earners Invest In Real Estate

Real estate is one of the favorite asset classes to build wealth by top income earners. Real estate is tangible, provides utility, and generates valuable income. With mortgage rates staying at record-lows and more people working from home, the growth of real estate will likely be strong for years to come.

Top income earners invest in rental properties for cash flow and capital appreciation. Top income earners tend to also be extremely busy. Therefore, they like to invest in real estate crowdfunding and private real estate to earn 100% passively.

Best Private Real Estate Investing Platforms

Fundrise: A way for all investors to diversify into real estate through private funds with just $10. Fundrise has been around since 2012 and manages over $3.3 billion for 400,000+ investors. 

The real estate platform invests primarily in residential and industrial properties in the Sunbelt, where valuations are cheaper and yields are higher. The spreading out of America is a long-term demographic trend. For most people, investing in a diversified fund is the way to go. 

CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations and higher rental yields. These cities also have higher growth potential due to job growth and demographic trends. 

If you are a real estate enthusiast with more time, you can build your own diversified real estate portfolio with CrowdStreet. However, before investing in each deal, make sure to do extensive due diligence on each sponsor. Understanding each sponsor’s track record and experience is vital.