In 2011, a family with two children making less than $26,400 will pay no federal income tax, the center said. Such a family would get the $11,600 standard deduction, as well as four exemptions of $3,700 each that would reduce its taxable income to zero.
“The basic structure of the income tax simply exempts subsistence levels of income from tax,” the group wrote.
About three-quarters of the remaining people who do not pay income tax are either senior citizens or low-income working families with children who are eligible for specific tax breaks. These taxpayers get breaks excluding some Social Security benefits from being counted as taxable income, as well as targeted tax credits and deductions for the elderly and children.
The Center determined that a family of four could make up to $45,775 and still not have to pay income tax because its tax liability would be erased by a $2,000 child tax credit and $57 from the Earned Income Tax Credit.
All told, households with an income of less than $50,000 make up nearly 90 percent of those households that do not pay federal income tax.
That, of course, leaves some medium- and higher-income groups avoiding federal income taxes thanks to certain specific tax breaks.
For example, itemized deductions such as credits for children and education can lower the tax burden for medium-income families making between $50,000 and $100,000 a year.
“Relatively few” households making more than $100,000 don’t pay income taxes, but there are some, according to the center. These households benefit from other deductions and reduced tax rates on capital gains and dividends, according to the Tax Policy Center.
While in 2011 the center found 46 percent paid no income taxes, the center notes that many of these people did pay federal payroll taxes as well as local sales and property taxes.