On a 2012 IRS filing, for instance, a family of four with a household income of $27,100 would have reported no taxable income because of an $11,900 standard deduction for married couples and personal and dependent tax exemptions of $3,800 each.
Among the other half of those whose income is not taxed by the federal government, 44 percent are exempt primarily because they receive tax deductions for the elderly or Social Security benefits that are not taxable because of low incomes, or both. Another 30.4 percent are working households that earn so little that benefits such as the child tax credit and earned income tax credit reduce their tax liabilities to zero.
Other people who could not be called irresponsible — including members of the military deployed in combat zones — do not pay federal income taxes. About 6 percent of nonpaying households are exempt mainly because of education credits, and 1.3 percent pay nothing because of low rates on capital gains and dividends, which, combined with tax credits, erase their federal income tax obligations.
Many in the latter group are wealthy people who derive much of their incomes from investments. The Tax Policy Center estimated that 4,000 households that earned more than $1 million last year paid no federal income taxes.