Mapping IRS Tax Return Filings Reveals Marked Differences in the Distribution of Income and Dependents

Published Apr 27, 2023

Most Americans filed their taxes recently, not only providing the federal government with funds needed to operate but also providing the IRS (and ultimately the public) with data about the reported amounts and sources of income, their number of dependents, and other factors that shape the distribution of financial means across the country.

For the U.S. as a whole, the average adjusted gross income (AGI) reported on federal income tax returns filed in 2021 increased to $76,539. This reflects income received during 2020, the first year of the COVID-19 pandemic. Filings during 2021 showed AGI up only slightly from $75,758 during the previous year. This does not adjust for inflation.

Reported income, however, varied markedly across states and counties. Aside from D.C., Massachusetts had the highest average reported income at $101,863, followed by Connecticut at $101,589 and Washington State at $95,584. The lowest AGI with only half that of the top three states was Mississippi at $50,876. West Virginia had the second lowest income at $53,461 while New Mexico returns reported on average an AGI of $56,383 which was the next lowest.

AGI does not tell the whole story, of course. Income variation by county does not take into account the cost of living, which is considerably higher in places like New York City and Los Angeles than in rural areas. Nonetheless, mapping the distribution of AGI by county shows where concentrations of lower-income and higher-income tax filers reside.

For instance, Figure 1 shows the lowest average income bracket used in this study (less than $40,000) concentrated in the U.S. South, including significant parts of Kentucky and West Virginia, rural parts of Georgia and the Carolinas, as well as the region surrounding the Mississippi River from Louisiana to Missouri. Beyond the South, other concentrations of lower-income filers exist in northern Nebraska, New Mexico in the Southwest, and the Rio Grande Valley region of South Texas.

Conversely, counties with the highest AGI are along the coasts and parts of the Western states, with Marin County (outside of San Francisco) showing an AGI of $213,349 and Manhattan in New York City showing an AGI of $208,568.

Although concentrations of lower-income counties appear in the South, according to IRS data, the mountain states are home to the counties with some of the highest and the lowest AGI. Crowley County in Colorado showed an AGI of $21,880, the lowest in the country and one of just 16 counties with an AGI under $30,000. Teton County in Wyoming which reports an AGI of $420,317 was the highest in the country – a ranking it has held for the prior five years as well. Its reported average AGI has doubled since 2017 when it was $210,905.

To highlight counties at both ends of the spectrum, Figure 2 shows the top 50 and bottom 50 counties by average AGI. The individual counties, along with their average AGIs in the top and bottom 50 are listed in Tables 1 and 2.

Contrasting Patterns by Income Source

AGI alone does not tell the full story, since sources of income also vary. Wages are paid compensation for employment. In contrast, dividends are income based on ownership in a company. Understanding the relationship between counties that fall above (or below) the country average of AGI and above (or below) the country average on dividends reveals interesting patterns. Counties in light purple report higher-than-average dividends but lower-than-average wages, while counties in light green report lower-than-average dividends but higher-than-average wages.

Number of Dependents Vary as Well

The average number of dependants reported on federal income tax returns fell to 1.83. This figure has been slowly falling over the last decade, down from 2.01 average dependents reported on returns filed in 2011.

But there is considerable variation in these numbers across counties. Reported averages varied from a high of 2.5 in Loving County, Texas and 2.44 in Morgan County, Utah to a low of 1.43 in Forest County, Pennsylvania and 1.48 in Manhattan, New York.

Not surprisingly, urban counties and those with higher AGI tend to report a lower average number of dependents. Low numbers of claimed dependents are common in New England (including Vermont, New Hampshire, Rhode Island, and Massachusetts) and in many urban areas such as Atlanta, Georgia, and Cleveland, Ohio.

Northern Michigan also shows very lower average dependents, as does much of Colorado, South Florida, and the urban parts of the Pacific Northwest. However, it’s not just urban counties; many rural counties across the country report an average of fewer than 2.0 dependents. By comparison, eastern Kentucky, Oklahoma, and Texas show comparably higher average claimed dependents across the state, with western Texas and much of Utah standing out as much higher than the norm.

National, State and County Statistics on Income Reported on Federal Tax Returns

TRAC makes these data available through an easy-to-use online “ Taxpayer Returns by County” tool, which the public can use to explore state-by-state and county-by-county information such as adjusted gross income, wages and salaries, income from interest and dividends, and exemptions. This unique tool makes it easy to browse through TRAC's extensive store of information covering the last quarter century on the constantly shifting types of income that flow to taxpayers in the fifty states and every one of the more than 3,000 counties. TRAC also provides a range of other tools for understanding IRS data, including data on audits and criminal enforcement, at TRAC’s IRS hub here.