According to the annual Tax Foundation calculation, on average Americans had to work 113 days (Leap Day February 29th - not counted) to earn enough money to pay for all federal, state and local taxes.
It is three (3) days earlier than the past two years, when Tax Freedom day was April 26th, but the same as 2005. The earlier date is due to a slowdown in the economy and the recently passed “stimulus” package.
Federal, state and local governments will take, on average, 30.8% of our income this year – down slightly from a year 2000 high of 33.6%. Tax Freedom Day 2000 was May 3rd.
TFD was created by Florida businessman Dallas Hostetler in 1948. He calculated the annual holiday until his retirement in 1971, when he turned the copyright over to the Tax Foundation.
In determining TFD the Foundation divides the total tax payments for the nation by its projected total income. It is assumed that we begin working on January 1st earning the same amount each day.
The Foundation also calculates the day by individual state. It comes as no surprise that New Jersey’s Tax Freedom Day comes out #2 on the list - May 7th. This is only one (1) day behind Connecticut (May 8th) and two (2) days ahead of New York (May 5th). Alaska has the earliest TFD at March 29th.
The Tax Foundation reports that we work 74 days to pay federal taxes and another 39 days for state and local taxes. Housing and “Household Operation” costs take 60 days and Health and Medical Care costs 50 days.
Click here to view the Foundation's complete Special Report on Tax Freedom Day.