PDF Individual Income Tax Returns, by State, 2007

Individual Income Tax Returns, by State, 2007

by Taquesha Cain

T he Economic Stimulus Act of 2008, which was signed into law on February 13, 2008, provided several individual and businesses tax benefits designed to boost the economy. One of the provisions of this act provided an economic stimulus payment to individuals who had qualifying income of at least $3,000 or a net income tax liability. Individuals received a stimulus payment based on their Tax Year 2007 returns, so many individuals filed tax returns even though they were not otherwise required to file. In total, there were 154.7 million individual tax returns filed for Tax Year 2007.1 Of those, an estimated 12.5 million individual income tax returns were filed solely to receive a stimulus payment.

The Statistics of Income (SOI) annually publishes "Historical Table 2," showing individual income and tax data by State and size of adjusted gross income (AGI). These data are extracted from the population of returns filed for a given tax year, and are collected as returns are processed by the Internal Revenue Service for administrative purposes. The Tax Year 2007 Historical Table 2 published in the spring 2009 issue of the SOI Bulletin included returns filed just to receive the economic stimulus payment. This makes comparisons to previous and later years' data very difficult. To ensure a consistent time series, SOI developed a State-level data file from an expanded statistical sample of returns filed for Tax Year 2007, which allows it to produce State-level estimates that exclude returns filed just to receive an economic stimulus payment (see Data Sources and Limitations section for details on this sample). This article presents data from this file (Table 1).

Excluding the additional tax returns filed solely for the economic stimulus payment, individual taxpayers filed approximately 142.2 million individual income tax returns for Tax Year 2007. The AGI re-

Taquesha Cain is an economist with the Individual Research Section. This article was prepared under the direction of Michael Strudler, Chief.

ported on these returns totaled slightly less than $8.7 trillion. In this article, selected sources of income, deductions, and tax components are reviewed at the State level. These include salaries and wages, net capital gain in AGI, business or profession net income, AGI, total itemized deductions, the alternative minimum tax (AMT), and income tax.

Selected Sources of Income

Salaries and wages, as reported on the individual tax return, are amounts of compensation primarily for personal services.2 This category includes items such as: salaries, wages, commissions, bonuses, tips, etc. Figure A shows the top 10 States with the highest average salaries and wages reported for Tax Year 2007. The average salaries and wages per individual tax return for the United States as a whole was $48,558, as reported on about 120.9 million returns. The highest average salaries and wages was reported in the category labeled "Other Areas," $95,650, although this group represented only 0.7 percent of the total salaries and wages reported for Tax Year 2007. Other Areas, which will be treated as a separate "State" throughout this analysis, includes returns filed by U.S. citizens living abroad, members of armed forces stationed overseas, and residents of Puerto Rico with income from sources outside Puerto Rico or with income earned as U.S. government employees. About 60 percent of these returns are from U.S. citizens living abroad, and these returns report appreciably higher salaries, other income, and taxes compared to the other areas included in this category. The two States with the next highest average salaries and wages were Connecticut, at $70,362, and New Jersey, at $64,651. Connecticut, with the second highest average salaries and wages, represented 1.8 percent of the total, while New Jersey represented 4.0 percent. The State that represented the largest percentage of total salaries and wages was California, with 12.9 percent of the total and average salaries and wages of $54,440, the eighth highest.

1 Historical Table 2 , Individual Income and Tax Data, by State and Size of Adjusted Gross Income, Tax Year 2007: Statistics of Income Bulletin, Spring 2009, Volume 28, Number 4, p. 132?185. 2 For further details on the definitions for data variables used in this text, see Statistics of Income--2007, Individual Income Tax Returns (IRS Publication 1304).

174

Individual Income Tax Returns, by State, 2007

Statistics of Income Bulletin | Spring 2011

Figure A

Salaries and Wages and Average Salaries and Wages, by Selected State, Tax Year 2007

[All figures are estimates based on a sample--money amounts are in thousands of dollars, average amounts are in whole dollars]

State

Total number of returns [1]

Number of returns Percentage with salaries and of returns having wages of returns salaries and wages

Salaries and wages

Average salaries and wages

Percentage of U.S. total salaries and

wages

(1)

(2)

(3)

(4)

(5)

(6)

All states Other areas [2,3] Connecticut New Jersey Massachusetts District of Columbia New York Maryland California Virginia New Hampshire

142,169,394 589,696

1,743,516 4,300,569 3,208,489

303,860 9,177,173 2,788,595 16,530,898 3,756,005

674,150

120,934,764 443,632

1,463,904 3,642,593 2,737,566

257,107 7,635,159 2,402,908 13,869,710 3,282,208

582,794

85.1 5,872,400,587

75.2

42,433,560

84.0

103,003,155

84.7

235,498,240

85.3

163,477,502

84.6

15,261,128

83.2

441,714,203

86.2

138,182,308

83.9

755,069,646

87.4

175,484,642

86.4

30,196,618

48,558 95,650 70,362 64,651 59,716 59,357 57,853 57,506 54,440 53,465 51,814

100.0 0.7 1.8 4.0 2.8 0.3 7.5 2.4

12.9 3.0 0.5

[1] Total number of returns does not include returns filed by individuals who had no other reason to file except to receive the economic stimulus payment.

[2] Includes returns filed from Army Post Office and Fleet Post Office addresses by members of the armed forces stationed overseas; returns filed by other U.S. citizens abroad; and returns filed by residents of Puerto Rico with income from sources outside Puerto Rico or with income earned as U.S. government employees.

[3] These data are based on the address listed on the Form 1040. This differs from the data in Historical Table 2 published in the spring 2009 issue of the Statistics of Income Bulletin, in which the State is based on the universal location code, a code used for IRS administrative processing. NOTE: The 10 States shown in this figure have the largest average salaries and wages (Column 5).

Business or profession net income or loss is a source of income or loss reported by individuals who are sole proprietors of a nonfarm business, including self-employed members of a profession. The top 10 States with the highest average business or profession net incomes are shown in Figure B. The average business or profession net income was $12,326, reported on nearly 22.9 million returns. The top three States with the highest average business or profession net income were the following: Other Areas, at $26,591, Connecticut, at $22,527, and the District of Columbia, at $19,443. Other Areas ranked highest in average business or profession net income but only represented 0.4 percent of the nation's total. Just as with salaries and wages, California represented the largest percentage, of all business or profession net income, 16.9 percent. California had more than 3 million returns that reported sole proprietorship net income or losses, and the average net income on these returns was $15,692.

Capital gain or loss is the combination of net short-term and long-term gain or loss from sales of capital assets. The net loss allowed to be included in AGI is limited to $3,000 ($1,500 for married filing separate filers). Figure C shows the top 10 States with the highest average net capital gain (less loss).

For Tax Year 2007, net capital gain (less loss) was reported on approximately 18.7 percent (26.6 million) of all returns, and the average capital gain reported on those returns was $33,624. The top three States with the highest average net capital gain (less loss) were the following: Wyoming, at $85,967, Nevada, at $74,048, and the District of Columbia, at $63,348. However, each of these States represented a small percentage of total capital gains (less loss) reported for 2007 (Wyoming represented 0.5 percent, Nevada represented 1.5 percent, and the District of Columbia represented just 0.4 percent). Once again, California reported the largest share of the U.S. total, 14.8 percent, followed by New York, with 12.7 percent. Of the top 10 States with the highest average capital gain, the State with the highest percentage of returns reporting this source of income was Connecticut, with 25.8 percent of all returns filed by Connecticut residents, followed by Other Areas, at 24.4 percent, and Massachusetts, at 23.5 percent.

Adjusted gross income is gross income less all adjustments, such as payments to Individual Retirement Arrangements (IRAs), alimony paid, certain student loan interest, and Figure D shows the top 10 States with the highest average AGI. The average AGI for the nation was $61,089. Connecticut had the

175

Individual Income Tax Returns, by State, 2007

Statistics of Income Bulletin | Spring 2011

Figure B

Business or Profession Net Income and Average Business or Profession Net Income, by Selected State, Tax Year 2007

[All figures are estimates based on a sample--money amounts are in thousands of dollars, average amounts are in whole dollars]

State

Total number of returns [1]

Number of returns with business or profession net

income

Percentage of returns having

business or profession net

income

Business or profession net

income

Average business or profession net

income

Percentage of U.S. total business or profession net income

(1)

(2)

(3)

(4)

(5)

(6)

All states Other areas [2,3] Connecticut District of Columbia New Jersey Massachusetts New Hampshire California Washington New York Alaska

142,169,394 589,696

1,743,516 303,860

4,300,569 3,208,489

674,150 16,530,898

3,170,643 9,177,173

363,641

22,856,073 42,078

266,052 45,467

599,735 494,378 109,644 3,027,536 449,452 1,538,764

59,224

16.1

281,724,509

7.1

1,118,880

15.3

5,993,254

15.0

884,006

13.9

11,027,051

15.4

9,013,498

16.3

1,958,336

18.3

47,507,517

14.2

6,853,535

16.8

22,950,760

16.3

874,995

12,326 26,591 22,527 19,443 18,387 18,232 17,861 15,692 15,249 14,915 14,774

100.0 0.4 2.1 0.3 3.9 3.2 0.7

16.9 2.4 8.1 0.3

[1] Total number of returns does not include returns filed by individuals who had no other reason to file except to receive the economic stimulus payment.

[2] Includes returns filed from Army Post Office and Fleet Post Office addresses by members of the armed forces stationed overseas; returns filed by other U.S. citizens abroad; and returns filed by residents of Puerto Rico with income from sources outside Puerto Rico or with income earned as U.S. government employees.

[3] These data are based on the address listed on the Form 1040. This differs from the data in Historical Table 2 published in the spring 2009 issue of the Statistics of Income Bulletin, in which the State is based on the universal location code, a code used for IRS administrative processing. NOTE: The 10 States shown in this figure have the largest average salaries and wages (Column 5).

Figure C

Capital Gain (Less Loss) and Average Capital Gain (Less Loss), by Selected State, Tax Year 2007

[All figures are estimates based on a sample--money amounts are in thousands of dollars, average amounts are in whole dollars]

State

Total number of returns [1]

Number of returns with net capital gain

(less loss)

Percentage of returns having net capital gain

(less loss)

Net capital gain (less loss)

Average capital gain (less loss)

Percentage of U.S. total capital gain (less loss)

All states Wyoming Nevada District of Columbia New York Other areas [2,3] Connecticut Florida Washington California Massachusetts

(1)

142,169,394 268,496

1,280,294 303,860

9,177,173 589,696

1,743,516 8,936,343 3,170,643 16,530,898 3,208,489

(2)

26,639,942 54,897

183,371 61,535

1,900,690 143,756 450,637

1,598,982 690,022

3,129,593 755,415

(3)

18.7 20.4 14.3 20.3 20.7 24.4 25.8 17.9 21.8 18.9 23.5

(4)

895,749,568 4,719,306

13,578,178 3,898,115

114,080,836 7,764,560

24,170,426 82,156,576 30,679,416 132,136,417 31,229,510

(5)

33,624 85,967 74,048 63,348 60,021 54,012 53,636 51,381 44,462 42,222 41,341

(6)

100.0 0.5 1.5 0.4

12.7 0.9 2.7 9.2 3.4

14.8 3.5

[1] Total number of returns does not include returns filed by individuals who had no other reason to file except to receive the economic stimulus payment.

[2] Includes returns filed from Army Post Office and Fleet Post Office addresses by members of the armed forces stationed overseas; returns filed by other U.S. citizens abroad; and returns filed by residents of Puerto Rico with income from sources outside Puerto Rico or with income earned as U.S. government employees.

[3] These data are based on the address listed on the Form 1040. This differs from the data in Historical Table 2 published in the spring 2009 issue of the Statistics of Income Bulletin, in which the State is based on the universal location code, a code used for IRS administrative processing. NOTE: The 10 States shown in this figure have the largest average salaries and wages (Column 5).

176

Individual Income Tax Returns, by State, 2007

Statistics of Income Bulletin | Spring 2011

Figure D

Adjusted Gross Income and Average Adjusted Gross Income, by Selected State, Tax Year 2007

[All figures are estimates based on a sample--money amounts are in thousands of dollars, average amounts are in whole dollars]

State

Number of

returns [1]

Percentage of returns

Adjusted gross income

Average adjusted gross income

Percentage of U.S. total adjusted gross

income

(1)

(2)

(3)

(4)

(5)

All states Connecticut Other areas [2,3] District of Columbia New York Massachusetts New Jersey Wyoming Maryland California Washington

142,169,394 1,743,516 589,695 303,860 9,177,173 3,208,489 4,300,569 268,496 2,788,595

16,530,898 3,170,643

100.0 1.2 0.4 0.2 6.5 2.3 3.0 0.2 2.0

11.6 2.2

8,685,052,796 167,238,015 51,790,832 24,822,445 713,879,723 249,055,678 333,318,778 20,495,860 195,978,693

1,132,597,606 216,702,912

61,089 95,920 87,826 81,690 77,789 77,624 77,506 76,336 70,279 68,514 68,347

100.0 1.9 0.6 0.3 8.2 2.9 3.8 0.2 2.3

13.0 2.5

[1] Total number of returns does not include returns filed by individuals who had no other reason to file except to receive the economic stimulus payment. [2] Includes returns filed from Army Post Office and Fleet Post Office addresses by members of the armed forces stationed overseas; returns filed by other U.S. citizens abroad; and returns filed by residents of Puerto Rico with income from sources outside Puerto Rico or with income earned as U.S. government employees. [3] These data are based on the address listed on the Form 1040. This differs from the data in Historical Table 2 published in the spring 2009 issue of the Statistics of Income Bulletin, in which the State is based on the universal location code, a code used for IRS administrative processing. NOTE: The 10 States shown in this figure have the largest average adjusted gross income (Column 4).

highest average AGI, at $95,920, followed by Other Areas, at $87,826, and the District of Columbia, at $81,690. For Tax Year 2007, AGI reported by the top 10 States with the highest averages represented about 35.8 percentage of total U.S. AGI, with California having the largest percentage, 13.0 percent.

Total Itemized Deductions

Figure E shows the top 10 States with the highest average total itemized deductions for Tax Year 2007. Together, the top 10 States with the highest average itemized deductions represented 40.4 percent of total itemized deductions. Average itemized deductions for the whole U.S. were $26,464 and were reported on just over 50 million returns. The top five States with the highest average total itemized deductions were: California, at $36,440, the District of Columbia, at $33,958, New York, at $33,435, Other Areas, at $32,098, and Connecticut, at $31,395. California, with the highest average itemized deductions, also represented the largest percentage of total U.S. itemized deductions, 17.4 percent of the total amount reported. New York followed with 8.8 percent of the U.S. total. The percentage of returns reporting

itemized deductions for the United States was 35.2 percent. In contrast, almost 50 percent of Maryland filers reported itemized deductions, the highest share among any State in the top 10. Maryland's average itemized deductions placed it ninth in the overall ranking.

The Alternative Minimum Tax and Income Tax

Figure F displays the top 10 States with the highest average alternative minimum tax (AMT) for Tax Year 2007. The average AMT for the United States was $5,895, and AMT was reported on about 2.9 percent (4.1 million) of all returns. The average AMT for the top 10 States ranged from $6,079 to $7,940. The top three States with the highest average AMT were Other Areas, at $7,940, Wyoming, at $7,587, and California, at $7,446. California represented the largest percentage, 22.9 percent, of the nation's total AMT, while Other Areas and Wyoming only represented 0.5 and 0.1 percent of total AMT, respectively. The top 10 States with the highest average AMT paid approximately 44.4 percent of the total, with just the top two States, California and New York, paying 37.7 percent. Of these top 10 States, the two States

177

Individual Income Tax Returns, by State, 2007

Statistics of Income Bulletin | Spring 2011

Figure E

Itemized Deductions and Average Itemized Deductions, by Selected State, Tax Year 2007

[All figures are estimates based on a sample--money amounts are in thousands of dollars, average amounts are in whole dollars]

State

Total number of returns [1]

Number of returns with itemized deductions

Percentage of returns having

itemized deductions

Itemized deductions

Average itemized deductions

Percentage of U.S. total itemized deductions

(1)

(2)

(3)

(4)

(5)

(6)

All states California District of Columbia New York Other areas [2,3] Connecticut New Jersey Nevada New Hampshire Maryland Massachusetts

142,169,394 16,530,898 303,860 9,177,173 589,696 1,743,516 4,300,569 1,280,294 674,150 2,788,595 3,208,489

50,085,995 6,323,771 125,945 3,487,979 76,049 781,088 1,929,824 478,660 246,714 1,386,890 1,320,898

35.2 1,325,484,755

38.3

230,440,950

41.4

4,276,846

38.0

116,621,852

12.9

2,440,994

44.8

24,522,011

44.9

58,473,057

37.4

14,265,520

36.6

7,223,523

49.7

39,936,413

41.2

37,405,806

26,464 36,440 33,958 33,435 32,098 31,395 30,300 29,803 29,279 28,796 28,318

100.0 17.4 0.3 8.8 0.2 1.9 4.4 1.1 0.5 3.0 2.8

[1] Total number of returns does not include returns filed by individuals who had no other reason to file except to receive the economic stimulus payment.

[2] Includes returns filed from Army Post Office and Fleet Post Office addresses by members of the armed forces stationed overseas; returns filed by other U.S. citizens abroad; and returns filed by residents of Puerto Rico with income from sources outside Puerto Rico or with income earned as U.S. government employees.

[3] These data are based on the address listed on the Form 1040. This differs from the data in Historical Table 2 published in the spring 2009 issue of the Statistics of Income Bulletin, in which the State is based on the universal location code, a code used for IRS administrative processing. NOTE: The 10 States shown in this figure have the largest average itemized deductions (Column 5).

Figure F

Alternative Minimum Tax and Average Alternative Minimum Tax, by Selected State, Tax Year 2007

[All figures are estimates based on a sample--money amounts are in thousands of dollars, average amounts are in whole dollars]

State

Total number of returns [1]

Number of returns paying

alternative minimum tax

Percentage of returns paying

alternative minimum tax

Alternative minimum tax

Average alternative minimum tax

Percentage of U.S. total alternative minimum tax

All states Other areas [2,3] Wyoming California District of Columbia New York Florida Nevada Vermont Maine Montana

(1)

142,169,394 589,696 268,496

16,530,898 303,860

9,177,173 8,936,343 1,280,294

318,602 648,047 470,100

(2)

4,103,044 15,840 3,851

743,498 16,291

500,378 164,797

18,020 8,794

14,708 8,601

(3)

2.9 2.7 1.4 4.5 5.4 5.5 1.8 1.4 2.8 2.3 1.8

(4)

24,187,662 125,773 29,216

5,535,892 118,933

3,576,407 1,050,866

114,203 54,929 90,450 52,284

(5)

5,895 7,940 7,587 7,446 7,301 7,147 6,377 6,338 6,246 6,150 6,079

(6)

100.0 0.5 0.1

22.9 0.5

14.8 4.3 0.5 0.2 0.4 0.2

[1] Total number of returns does not include returns filed by individuals who had no other reason to file except to receive the economic stimulus payment.

[2] Includes returns filed from Army Post Office and Fleet Post Office addresses by members of the armed forces stationed overseas; returns filed by other U.S. citizens abroad; and returns filed by residents of Puerto Rico with income from sources outside Puerto Rico or with income earned as U.S. government employees.

[3] These data are based on the address listed on the Form 1040. This differs from the data in Historical Table 2 published in the spring 2009 issue of the Statistics of Income Bulletin, in which the State is based on the universal location code, a code used for IRS administrative processing. NOTE: The 10 States shown in this figure have the largest average alternative minimum tax (Column 5).

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