Fewer Americans owed federal income tax in 2020. Here’s why

Fewer Americans owed federal income tax in 2020. Here's why

IRS officials announced this week that fewer Americans owed federal income taxes last year. An astounding 61% of households, or nearly 107 million, didn’t owe any income tax in 2020. 

That is one of the steepest increases in quite some time. In 2019, only 44% of American households didn’t have to pay federal income tax. An official at the nonpartisan Tax Policy Center called the sharp increase “eye-popping.” 

But why was there such an increase in Americans not having to pay federal income tax? And what do officials expect next year’s tax season to look like? Here’s why an increase or decrease of those having to pay income tax next year largely depends on these Democratic tax credits that are hanging in the balance.  

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