What income percentile am I in for 2020? Am I in the 1% or 99%? What is the median American income?
These are commonly asked questions. People want to compare their income to others. Additionally, some are wanting to achieve more than the normal person. As such, they want to know other's income. It comes as no surprise that this changes yearly. This page provides household and individual income percentiles for the United States for 2020. The data provided is evaluated before taxes (gross) income.
In this post, I provide answers to these questions. I utilize reliable data provided by Integrated Public Use Microdata Series, Current Population Survey. Along with, the Pew Research Center's income class calculator.
Next, I will share the U.S. household income percentiles.
United States Household Income Percentiles
The chart below depicts the United States household gross (before taxes) income percentiles:
Most individuals are probably asking what the average income is. However, the median is a better representation of this data. Under the given circumstances, the median gives a more accurate central tendency than the average.
Now, we can answer numerous questions with the provided chart.
What Is The 2020 U.S. Median Household Income?
The median is commonly expressed as the middle value. The chart above depicts this as $68,400.
How Much Household Income Does the Middle Class Make?
This is a dynamic calculate. According to Pew Research Center, the size of the household and your city's cost of living are factors in determining this. They determined a middle class household of 3 made between $48,500 to $145,400.
However, this will vary by the location. For example, a household of 3 in the New York City metropolitan area that has an income of $180,000 is considered middle class. Contrary, the same family making $180,000 in the Nashville, Tennessee metropolitan area is considered upper class.
The Pew Research Center's income class calculator is user friendly and can assist in providing more calculations.
What was the top 10% Household Income in 2020?
In other words, how much household income does the 90th percentile make? You needed to make approximately $201,000 to be in the top 10% of household incomes in 2020 in the United States.
What was the top 5% Household Income in 2020?
In other words, how much household income does the 95th percentile make? A household needed to make approximately $270,000 in 2020 to be in the top 5%.
What was the top 1% Household Income in 2020?
In 2020 the United States household one-percenters made approximately $531,000.
United States Individual Income Percentiles
The chart below depicts the United States individual gross (before taxes) income percentiles:
As previously mentioned, the median is a better representation of the data than the average (mean). As the chart depicts, large income outliers can skew the average. Thus, the median gives a more accurate central tendency than the average.
Now, we can answer numerous questions in regard to an individual's 2020 income.
What Is The 2020 U.S. Median Individual Income?
The median is commonly expressed as the middle value, or 50th percentile. The chart above depicts this as $43,205.
How Much Individual Income Does the Middle Class Make?
As previously mentioned, this is a dynamic calculation. According to Pew Research Center, the size of the household and your city's cost of living are factors in determining this. However, Pew Research Center believes that an individual making $28,000 to $78,000 is considered middle class.
However, this will vary by the location. For example, an individual in the New York City metropolitan area that has an income of $100,000 is considered middle class. Contrary, the same individual making $100,000 in the Nashville, Tennessee metropolitan area is considered upper class.
What was the top 10% Individual Income in 2020?
In other words, how much income did an individual need to make to be in the 90th percentile? An individual needed to make $125,105 in 2020 to be in the 90th percentile.
What was the top 5% Individual Income in 2020?
In other words, how much income did an individual need to make, in 2020, to be in the 95th percentile? An individual needed to make $174,000 in 2020 to be in the 90th percentile.
What was the top 1% Individual Income in 2020?
In other words, how much income did an individual need to make, in 2020, to be in the 99th percentile? An individual needed to make $361,000 in 2020 to be in the 99th percentile.
Further Analysis
The data previously provided answered the most common questions. Although, sharing the data's quartiles is just as important. A quartile is used to observe data into four intervals based on the data. This is a quick way to interpret the spread in income. Importantly, it shows the spread from the median. The first quartile is the lowest 25% of income. The 25th percentile for 2020 household income is approximately $34,300, and $23,000 for an individual. The second quartile is represented by the median values. As previously mentioned, this is approximately $68,400 for 2020 household income and $43,205 for individual income. The third quartile is the 75th percentile. This is approximately $123,580 for 2020 household income and $75,050 for individual income.
It is clear, the high earners are well above the middle class. An individual income of $361,000 far exceeds the threshold for middle class. The top individual earner in the middle class had a 2020 income of approximately $78,000. That one percent individual makes over 4 times the amount of a middle class individual.
In Conclusion
High earners make astronomically more than the low income. However, income does not control an individual building wealth. This is especially true if a large budget is squandered by frivolous spending. Income does not completely control wealth. Investing and managing money will increase your net worth.
Do not let your income control you or your future. If you want to build wealth set clear goals, plan accordingly, and meet all deadlines.
What was your income percentile for 2020? What are your income goals for 2021? I would love to hear how you plan to increase your income.
Sources for Data
- Sarah Flood, Miriam King, Renae Rodgers, Steven Ruggles and J. Robert Warren. Integrated Public Use Microdata Series, Current Population Survey: Version 8.0 [dataset]. Minneapolis, MN: IPUMS, 2020. https://doi.org/10.18128/D030.V8.0
- Jesse Bennett, Richard Fry, and Rakesh Kochhar. Are you in the American middle class? Find out with our income calculator. July 23, 2020. http://pewrsr.ch/1T5MEP9
