Individual taxpayers owed the IRS hundreds of billions more than usual when they filed their 2021 tax returns last month. Figure 1 shows the amount of nonwithheld individual income tax collected around each year’s tax filing deadline since 2005.1 Adjusted for inflation, collections of nonwithheld tax in filing months were just over $300 billion in the years before the pandemic, dipped below $250 billion in 2021, and then surged to more than $500 billion in April 2022. Nonwithheld income taxes include taxes on income from financial assets and income from pass-through businesses, but exclude taxes on wages withheld by employers throughout the year.
Notes: Figures are adjusted for inflation based on the price index for Personal Consumption Expenditures (PCE). The tax filing deadline is generally in April but was extended to July in 2020 and to May in 2021.
Sources: Penn Wharton Budget Model, Department of the Treasury, Bureau of Economic Analysis.
The surge in taxes due at filing came entirely from taxpayers who paid by electronic funds transfer. Figure 2 compares cumulative (year-to-date) weekly payments of nonwithheld tax in 2022 with recent years, broken out by method of payment. Electronic payments and payments by check show strikingly different patterns in the years since 2020. Electronic payments rose well above pre-pandemic norms, accounting for extensions of the tax filing deadline in 2020 and 2021. In contrast, payments by check stagnated.
The magnitude of electronic payments in recent years, and especially in 2022, is unprecedented. Adjusted for inflation, payments in the middle two weeks of April 2022 alone exceeded total electronic payments over any full calendar year prior to 2020. Total annual electronic payments reached historic highs in both 2020 and 2021 but both were already surpassed by the end of April 2022, with eight months of tax collections still ahead.
Notes: Figures are adjusted for inflation based on the price index for Personal Consumption Expenditures (PCE). The tax filing deadline is generally in April but was extended to July in 2020 and to May in 2021.
Sources: Penn Wharton Budget Model, Department of the Treasury, Bureau of Economic Analysis.
Both businesses and households pay nonwithheld income taxes, but the divergence across payment methods points to households as the source of the recent surge. Noncorporate business owners generally estimate the nonwithheld tax liability on their business income and make payments of estimated tax throughout the year, settling any differences between actual and estimated tax liability when they file their returns. For financial reasons, these payments are typically made by check.2 Households generally owe nonwithheld tax on their financial income – including capital gains, dividends, and interest – and pay the full amount when they file. Most households file their returns electronically and most of the tax due at filing is paid by electronic funds transfer.
The unprecedented surge in households’ nonwithheld tax liability reflects an equally unprecedented surge in financial income in 2021.3 Figure 3 shows annual growth in the value of corporate equities and mutual fund shares owned by households. Household equity wealth rose 40 percent last year – nearly twice as fast as any other year since 1990 – as the economy recovered and equity prices rose sharply. Recent years have also seen a substantial increase in the volume of trading by households. Rapid asset price appreciation and broadening participation in markets imply an unusually high level of household financial income in 2021, especially capital gains.
Note: Growth rates are calculated as the percentage change in the annual average of quarterly levels.
Sources: Penn Wharton Budget Model; Federal Reserve Board.
High levels of financial income are historically associated with more tax owed when individuals file their returns. Figure 4 plots the aggregate share of adjusted gross income (AGI) accounted for by income from financial assets against the share of total tax liability due at time of filing. Since households pay taxes on their financial income only when they file their returns, there is a strong positive relationship between the two. Historical data is currently available only for the 1990-2019 period but Figure 4 shows PWBM’s estimates for 2020 and 2021, based on the historical relationships between tax payments, tax liability, and financial income. These relationships imply that financial income made up nearly one fifth of AGI in 2021, higher than any year since at least 1990.
Notes: Financial income includes capital gains, dividends, and taxable interest. The shaded areas represent 95 percent confidence intervals around the linear trend (dashed line).
AGI = adjusted gross income.
Sources: Penn Wharton Budget Model; IRS Statistics of Income.
This analysis was prepared by Alexander Arnon under the direction of Richard Prisinzano. Prepared for the website by Mariko Paulson.
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The tax filing deadline is generally in April but was extended to July in 2020 (filing for the 2019 tax year) and to May in 2021 (filing for the 2020 tax year). ↩
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Paying by check allows a taxpayer or a taxpayer’s bank to initiate a tax payment while retaining use of the funds until the check clears, which may take several days. ↩
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Returns filed in April 2022 cover income earned in the 2021 tax year.
Government transfer payments were also unusually high in 2021, and these payments could have affected taxpayers’ position when they filed. However, they cannot account for the surge in tax payments relative to prior years. Most of the transfers, including Economic Impact Payments (stimulus checks) and the expanded Child Tax Credit, actually reduced tax liability or the amount owed at filing. Unemployment insurance benefit payments – which do tend to increase tax owed at filing – fell more than a third from 2020 to 2021. ↩
YearMonth Year Deposits Apr 2006 2006 213.0759613 Apr 2007 2007 256.8346422 Apr 2008 2008 289.7004123 Apr 2009 2009 187.8329115 Apr 2010 2010 153.0960963 Apr 2011 2011 188.1472227 Apr 2012 2012 186.9109613 Apr 2013 2013 262.1098818 Apr 2014 2014 261.0023624 Apr 2015 2015 307.7738399 Apr 2016 2016 281.4491768 Apr 2017 2017 268.1308983 Apr 2018 2018 323.9258228 Apr 2019 2019 326.8238484 Jul 2020 2020 303.4158818 May 2021 2021 243.079 Apr 2022 2022 522.1208625
Type Week min med max 2020 2021 2022 Check 1 4.904039351 7.293084127 8.608342659 4.778055644 4.785 5.661968747 Check 2 15.88925566 18.90712088 23.20395504 17.41705153 16.347 17.16963645 Check 3 39.1450805 51.13839384 78.82999622 41.971064 49.592 48.58846473 Check 4 77.23723727 80.49732354 86.66263445 79.76548415 77.904 81.00770882 Check 5 80.64388409 82.87409977 88.87010508 82.40691795 82.367 84.28984225 Check 6 82.57137881 84.58437348 90.53069981 84.53626884 83.914 86.06846614 Check 7 83.53369161 85.82518973 91.86849357 85.57186046 85.123 88.20781688 Check 8 85.06530731 87.16455838 93.50912124 87.02709002 86.402 91.8112377 Check 9 87.2605483 89.16900866 96.16363239 89.12424097 88.705 94.36710772 Check 10 91.89766153 92.8007651 100.3389688 92.49069278 91.552 97.73100591 Check 11 94.33286495 95.21771806 102.8470548 95.09057827 93.798 100.4350144 Check 12 97.64041143 98.41845039 106.0539882 97.89716661 96.483 103.9605182 Check 13 102.0357592 102.6840251 110.7092647 100.3412459 99.705 108.8942997 Check 14 110.0638158 112.0914742 121.9299876 102.5038355 105.014 119.2072401 Check 15 129.601739 136.7336779 155.8195956 106.0873772 115.513 143.6904933 Check 16 200.1506906 231.0008504 274.6617837 112.8420937 153.419 215.1894422 Check 17 300.6944668 318.3306694 352.0091448 117.4134465 177.038 318.9883548 Check 18 309.6730875 325.5720831 356.9153401 119.3901073 186.058 330.0256347 Check 19 311.5370065 327.8190558 359.6132433 121.5682775 197.586 Check 20 313.2908987 329.7069193 362.2349598 123.6540027 239.713 Check 21 315.0284503 331.5296671 363.4315382 125.4707025 294.116 Check 22 316.8825649 333.5597326 366.563033 128.1121363 308.325 Check 23 321.9307241 338.276489 373.922886 132.3324059 315.299 Check 24 337.5229346 357.8980749 401.4296226 139.0268773 334.811 Check 25 379.6250622 397.8252743 436.830639 149.6840188 374.973 Check 26 383.288627 401.5166487 440.0719322 155.4031437 378.644 Check 27 385.3268458 403.5165857 442.3407254 164.2072306 380.909 Check 28 387.0415206 405.6032224 444.284605 186.6744792 383.156 Check 29 388.9261376 407.7591793 446.3192363 264.475767 385.921 Check 30 390.5950587 409.3904 447.9919811 321.7968541 387.795 Check 31 392.0439261 410.8305733 449.4260825 331.3550428 389.331 Check 32 393.5189385 412.366951 451.0472893 333.6225418 391.157 Check 33 395.0712965 413.9558731 452.7379603 335.5389576 392.888 Check 34 396.9199643 415.7739664 454.7042478 337.6039086 394.761 Check 35 399.071478 417.7561524 457.3416498 341.0087926 397.236 Check 36 403.2470486 422.7189067 461.2394925 345.1511591 402.482 Check 37 417.3642467 442.0127847 485.0478161 357.1721239 416.331 Check 38 466.0167803 484.5098955 531.9653388 396.8871147 455.368 Check 39 470.6694968 493.6268815 536.7157996 408.0812681 464.649 Check 40 473.3319269 496.1530689 539.5022137 411.8123063 467.644 Check 41 475.9475139 498.5462865 541.3777494 415.0052939 470.604 Check 42 483.3519892 507.3283946 553.6415569 420.9726699 479.785 Check 43 489.8468372 514.5460394 558.8088034 430.9411482 484.865 Check 44 491.5070432 516.2393088 560.7907763 433.4236597 486.548 Check 45 493.0550437 517.5993558 562.4680027 435.3016433 487.814 Check 46 494.4973749 519.010143 564.4858282 436.6852021 489.485 Check 47 495.9854599 520.678871 565.9916346 438.1082317 490.931 Check 48 497.3569818 522.0418644 567.2128615 439.4793259 492.274 Check 49 499.2089176 523.7528823 569.2284462 440.8670395 494.062 Check 50 501.6610986 526.2857489 572.0058972 442.347198 496.568 Check 51 505.4063665 529.7476225 575.9328701 444.621968 500.061 Check 52 510.9349397 535.0537337 580.5130314 449.3792495 504.247 Electronic Payment 1 0.647904883 1.313679678 1.821713451 2.747381995 3.753 5.09923485 Electronic Payment 2 2.937468239 6.416543954 8.392360526 11.84750058 18.835 27.19784308 Electronic Payment 3 6.713731882 13.48186171 21.42180241 27.49459411 42.593 59.07647785 Electronic Payment 4 6.983224381 14.02171133 22.49909352 28.5249922 44.088 61.39763493 Electronic Payment 5 7.180852213 14.50539291 23.62578238 29.44736468 45.344 62.90595417 Electronic Payment 6 7.390831786 15.04678146 24.25113673 30.20042779 46.088 64.82790686 Electronic Payment 7 7.61990041 15.62915648 24.88069515 31.02827787 47.579 67.90033774 Electronic Payment 8 7.942168523 16.1997176 25.93276188 32.25499172 48.94 69.44136288 Electronic Payment 9 8.68215001 17.26456098 27.29382724 33.82967267 51.614 72.41567605 Electronic Payment 10 9.023507175 17.96543447 28.6485865 35.14987022 53.561 74.7358712 Electronic Payment 11 9.624250871 19.18461177 30.31234439 36.89282182 55.997 78.28927122 Electronic Payment 12 10.19804532 20.14595629 31.95297993 38.06136804 58.224 81.90808305 Electronic Payment 13 11.31194765 21.54250248 34.9399666 39.1156564 61.235 89.10722918 Electronic Payment 14 13.08049217 24.53354909 40.43257476 40.4420862 65.179 104.2981586 Electronic Payment 15 34.93128139 46.81359153 99.14021086 44.24583397 103.886 210.655827 Electronic Payment 16 54.77210465 89.08437021 141.3794816 50.09791343 120.501 394.8910571 Electronic Payment 17 55.20104688 90.11461405 143.2166571 51.24464678 123.816 398.3501872 Electronic Payment 18 55.52106922 91.02320911 144.3065604 52.56588304 131.797 399.1784161 Electronic Payment 19 55.8388458 91.61470169 145.0937712 53.49137164 151.799 Electronic Payment 20 56.34751289 92.33121461 146.1595011 54.79598858 247.766 Electronic Payment 21 56.54850938 92.83355491 146.6650397 55.82742537 250.068 Electronic Payment 22 56.91232425 93.40857029 147.7370757 57.45611912 252.62 Electronic Payment 23 57.68150076 94.70457277 149.5500778 58.9819808 259.429 Electronic Payment 24 64.00334563 105.1997718 164.1581453 63.10772798 292.813 Electronic Payment 25 64.49629233 106.186893 167.5098345 65.19137573 294.975 Electronic Payment 26 64.8758276 106.9019184 168.6606967 68.26283454 296.694 Electronic Payment 27 65.17002357 107.4071912 169.5687743 75.04975097 298.013 Electronic Payment 28 65.56415635 107.9299536 170.5766983 113.5993116 299.853 Electronic Payment 29 65.79097921 108.6177049 171.3607561 195.5388111 301.442 Electronic Payment 30 66.10426424 109.1471529 172.1731912 197.0210471 302.867 Electronic Payment 31 66.36701942 109.6261612 172.9152083 198.1199999 304.357 Electronic Payment 32 66.63875769 110.0712369 173.5374096 199.3404815 305.632 Electronic Payment 33 67.01604719 110.6748547 174.4129057 200.4633246 307.139 Electronic Payment 34 67.25522179 111.2076505 175.2284939 201.5363097 308.721 Electronic Payment 35 67.55503219 111.9060196 175.9263684 202.9936166 311.053 Electronic Payment 36 68.34217487 112.9217305 178.0336549 205.0793418 315.008 Electronic Payment 37 75.86101559 123.5115508 193.9008392 224.107429 350.768 Electronic Payment 38 76.47074237 125.7876904 198.6966239 230.4373141 354.348 Electronic Payment 39 76.87385823 126.5371505 199.8716595 231.7751696 356.583 Electronic Payment 40 77.36568204 127.3235924 201.1381335 233.2407863 358.778 Electronic Payment 41 77.81820486 128.2618383 202.2049144 234.8248156 361.731 Electronic Payment 42 79.84838169 131.5468689 207.6155433 241.4621581 370.958 Electronic Payment 43 80.29192143 132.0942916 208.5351821 242.6421301 372.542 Electronic Payment 44 80.52435871 132.703881 209.3497193 243.71927 374.007 Electronic Payment 45 80.83539797 133.1481759 209.862615 244.61152 375.118 Electronic Payment 46 81.22616209 133.7287847 211.1932009 245.6803503 376.863 Electronic Payment 47 81.5181123 134.1785066 212.0203502 246.7232129 378.021 Electronic Payment 48 81.82129136 134.7882354 212.7697244 247.6860949 379.603 Electronic Payment 49 82.1334535 135.4272407 213.6883122 248.894112 381.272 Electronic Payment 50 82.73532008 136.72334 215.3699373 251.051508 384.227 Electronic Payment 51 83.34729263 137.7988498 216.7772474 253.1341171 387.339 Electronic Payment 52 84.20293132 139.6338729 218.8120138 256.8807359 392.732
Year Growth 1989 20.26282049 1990 -2.155848694 1991 25.27943209 1992 20.5702915 1993 22.20172325 1994 0.926525497 1995 17.67549507 1996 20.64608197 1997 22.84234922 1998 23.65125187 1999 15.72842379 2000 11.00014992 2001 -20.13862297 2002 -12.26309848 2003 3.826021756 2004 23.66906435 2005 11.90503583 2006 18.7739604 2007 13.44982594 2008 -22.62276144 2009 -13.89703947 2010 23.42447695 2011 10.01617289 2012 9.289278384 2013 20.85686949 2014 17.02265064 2015 3.019872048 2016 4.099537351 2017 14.71148134 2018 5.74801154 2019 10.96833788 2020 5.754426818 2021 40.3382066
Year Label FinancialIncome_Share TaxDueAtTimeOfFiling_Share Linear Linear_Lower Linear_Upper 1990 Historical 12.37682011 12.76525208 12.11551594 11.69062967 12.54040222 1991 Historical 11.24167987 11.77099538 11.59245167 11.13191241 12.05299092 1992 Historical 9.878361493 11.00985679 10.96424459 10.37549804 11.55299115 1993 Historical 9.535553305 10.55739153 10.8062811 10.17617119 11.43639101 1994 Historical 8.979302699 11.6094571 10.54996491 9.847804164 11.25212566 1995 Historical 10.02035411 12.55706809 11.02967374 10.45722942 11.60211806 1996 Historical 11.50236812 13.7947327 11.7125749 11.26717516 12.15797463 1997 Historical 13.04393289 13.89126308 12.4229166 11.98010969 12.86572351 1998 Historical 13.71678705 13.83416187 12.73296284 12.24579325 13.22013244 1999 Historical 14.53169733 14.61929887 13.10846751 12.5412914 13.67564362 2000 Historical 15.34633116 15.01307227 13.48384478 12.81776145 14.14992812 2001 Historical 10.44044627 10.61437197 11.22324912 10.69562749 11.75087075 2002 Historical 8.138692961 10.28879497 10.16261813 9.343229678 10.98200658 2003 Historical 9.950682203 9.484426784 10.99756944 10.41719196 11.57794692 2004 Historical 12.61599057 11.98960837 12.22572393 11.79770516 12.65374269 2005 Historical 15.0341673 13.12391612 13.34000197 12.71352247 13.96648148 2006 Historical 16.66979113 13.02783788 14.0936854 13.24392416 14.94344663 2007 Historical 18.05581538 12.52026924 14.73235518 13.6739597 15.79075065 2008 Historical 12.96003495 9.713118999 12.38425705 11.94524162 12.82327247 2009 Historical 9.00261543 9.429243929 10.56070725 9.861669137 11.25974536 2010 Historical 10.18703661 10.32430483 11.10647981 10.55246696 11.66049267 2011 Historical 9.956528845 9.805566271 11.00026353 10.42055673 11.57997033 2012 Historical 13.18081258 10.95450822 12.48598975 12.0361121 12.9358674 2013 Historical 10.59325513 11.56690521 11.29366232 10.78089348 11.80643116 2014 Historical 12.68742556 12.17676379 12.25864064 11.82895775 12.68832353 2015 Historical 12.39763234 11.90674257 12.12510606 11.7000979 12.55011422 2016 Historical 11.47781706 11.19027879 11.70126195 11.25459855 12.14792534 2017 Historical 13.25829551 12.09953938 12.52169332 12.06734325 12.97604338 2018 Historical 13.9156241 12.91238931 12.82458549 12.32016295 13.32900804 2019 Historical 13.35327667 13.54276254 12.56545994 12.10518179 13.02573808 2020 Estimated 11.12908021 12.45989807 11.54056657 11.07236496 12.00876818 2021 Estimated 18.40532619 16.00238561 14.89340718 13.78084443 16.00596993