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August 1, 2010
Effect of Expiration of Bush-Era Tax Cuts on
Average Middle-Income Family, by State and
This Tax Foundation Fiscal Fact analyzes the impact that the expiration of the so-called "Bush-era"
tax cuts would have on the average middle-income family's tax bill in each state and congressional
district. Family circumstances such as income level, sources of income, marital status, number of
children, housing status, and a myriad of other factors can affect federal income tax liability. And
these factors can vary significantly across geographic locations.
Because of these differences in family characteristics, how families are affected by the looming
expiration of tax cuts that is set to take place on December 31 can also vary across geographic
locations. For example, families with more children will face a bigger tax impact than families
without children due to the child tax credit doubling, which was part of the tax cuts. Also, married
families will be affected differently than single families due to the marriage penalty provisions that
are due to return if the tax cuts are not extended. And obviously, savings from the tax rate cuts in
the Bush tax cuts depend upon a tax return's level of income, as well as the sources of that income
(e.g., dividend and capital gains income versus wage income).
For more information on the Bush-era tax cuts, visit the Tax Foundation's "Bush" Tax Cuts FAQ.
Overview of Methodology
By the term "average middle-income family," we are referring to the average of the families in the
middle 20 percent of the income distribution. This is different from the "average family," which
would have a much higher income level than the "average of the middle-income families," given the
skewed distribution of income.
Technically, we analyze the difference between the average tax bill under both expiration and
extension for the middle 20 percent of families within each state and congressional district. Note