The national Tax Freedom Day cometh, and it’s April 24.
“Uh, so?” you in the final throes of busy season ask.
Tax Freedom Day is when the total of all federal, state, and local taxes is divided by the nation’s income, and the nation has earned enough money to pay its tax bill for the year.
This year, Americans will pay $3.3 trillion in federal taxes and $1.6 trillion in state and local taxes, totaling $4.9 trillion, or 31 percent of national income. That’s more than food, clothing, and housing combined, according to a report by the Tax Foundation.
This year, Americans will work the longest (46 days) to pay federal, state, and local individual income taxes. Payroll taxes will take 26 days to pay, followed by sales and excise taxes (15 days), property taxes (11 days), and corporate income taxes (nine days). The remaining seven days are spent paying estate and inheritance taxes, customs duties, and other taxes.
Tax Freedom Day actually arrives a day earlier in 2016 because of slightly lower projected collections of federal corporate, payroll, and excise tax revenues. If annual federal borrowing is included, which represents future taxes owed, this year’s budget deficit of $698 billion would push “freedom day” to May 10.
The latest the day ever arrived was May 1, 2000, when Americans paid 33 percent of their total income in taxes, the report states. In 1900, Tax Freedom Day arrived on Jan. 22, when Americans paid 5.9 percent of their income in taxes.
State taxes vary, of course, which affects individual states’ Tax Freedom Days quite a bit. The lower the tax burden, the earlier the day arrives and vice versa for higher-income or higher-tax states.
For example, Connecticut celebrates on May 21. For Mississippi, with the lowest tax burden this year, it already occurred on April 5, making it the first state in the country to celebrate Tax Freedom Day. The last state in the country? Connecticut, on May 21.
Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.