As inflation continues to increase, it’s no secret that American’s wallets are getting smaller.
According to a recent Congressional Budget Office report, there will be an expected 28 percent rise of individual income tax this year, resulting in a total of $2.6 trillion in taxes in 2022.
This is an increase of $2 trillion from the year prior, making it the highest it has ever been, plus the biggest share of gross domestic product since income taxes began.
“At 10.6% of GDP, that total is expected to be the highest amount of individual income tax receipts recorded since 1913, when ratification of the Sixteenth Amendment authorized the federal government to begin collecting income taxes.”
The CBO said it is expecting the overall federal revenue to reach $4.8 trillion in 2022, making it a 19 percent one-year increase.
The numbers are higher than what the agency was preparing for, and as the economy is still struggling to recover from the Wuhan Coronavirus pandemic, the agency is predicting the numbers will soar even more.
“The strong revenue growth in 2021 and 2022 results mostly from large increases in collections of individual income taxes. Total revenues in 2022 are projected to equal 19.6% of the nation’s gross domestic product — the largest annual revenues relative to the size of the economy since 2000.”
The agency also said if the Internal Revenues Service receives the budget hike proposed by Joe Biden, the collections will rise further.
CBO experts say a hike in income taxes will spike once more in 2025 after President Trump’s 2017 tax cuts provision expire.