Order Code RS20811
Updated September 7, 2007
The Distribution of Income
Brian W. Cashell
Specialist in Macroeconomic Policy
Government and Finance Division
Summary
Although not itself a subject of legislation, the shape of the U.S. income
distribution is a factor in a number of policy areas of congressional interest, including
taxes, welfare, Social Security, and the minimum wage. The Bureau of the Census
conducts an annual survey from which it derives estimates of the distribution of income
in the United States. This report presents summary estimates of the distribution of
household income for 2006. It will be updated periodically. For more information on
the distribution of income including changes over time, see CRS Report RL32639,
Inequality in the Distribution of Income: Trends and International Comparisons, by
Brian W. Cashell.
The Distribution of Household Income
The Bureau of the Census conducts an annual survey from which it derives estimates
of the distribution of household income. The Census Bureau’s ‘official’ measure of
income is based on the concept of money income and includes earnings, Social Security,
interest, dividends, and other forms of social insurance. It excludes the value of non-
money benefits such as food stamps and housing subsidies. It does not include capital
gains, and it is pre-tax income.1
Table 1 shows the distribution of income in 2006, by quintile, using this official
measure of household income. Each quintile represents 20% of the total number of
households. In 2006, there were 116,011,000 households, so each quintile represents
23,202,200 households. The top 5% (the top 5,800,550 households) are also shown
independently, because they alone account for a significant share of household income.
The Census Bureau publishes these estimates by quintile to provide a concise
snapshot of the overall distribution of income. It should be noted that there is no official
1 The complete Census Bureau report on income is available on their website at
[http://www.census.gov/hhes/www/income/income.html].

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definition of “middle class,” but one approach that has been used is to group together the
three middle quintiles. In 2006, that included those households with incomes between
$20,035 and $97,032. The concept of middle class, however, remains entirely
subjective.2
Table 1. Distribution of Household Income, 2006
Quintiles
Top 5%
Lowest
Second
Third
Fourth
Highest
share of households (%)
20
20
20
20
20
5
$20,035
$37,774
$60,000
less than
more than more than
Range of income class
to
to
to
$20,035
$97,032
$174,012
$37,774
$60,000
$97,032
share of household
3.4
8.6
14.5
22.9
50.5
22.3
income (%)
Source: Department of Commerce, Bureau of the Census.
Data describing the distribution of household money income are also available by
level of income, or income class. These figures, shown in Table 2, indicate the number
and share of households in selected income ranges up to and above $250,000. Also
shown are median and mean household income.
2 See CRS Report RS22627, Who Are the ‘Middle Class’? by Brian W. Cashell.

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Table 2. Distribution of Household Income, 2006
# of Households
Income Class
% of Households
(in thousands)
All Households
116,011
100.0
Less than $5,000
3,563
3.1
$5,000 to $9,999
5,126
4.4
$10,000 to $14,999
6,880
5.9
$15,000 to $19,999
6,846
5.9
$20,000 to $24,999
6,891
5.9
$25,000 to $29,999
6,630
5.7
$30,000 to $34,999
6,723
5.8
$35,000 to $39,999
5,975
5.2
$40,000 to $44,999
5,877
5.1
$45,000 to $49,999
5,074
4.4
$50,000 to $59,999
9,530
8.2
$60,000 to $69,999
7,889
6.8
$70,000 to $79,999
6,904
6.0
$80,000 to $89,999
5,441
4.7
$90,000 to $99,999
4,510
3.9
$100,000 to $149,999
13,385
11.5
$150,000 to $199,999
4,751
4.1
$200,000 to $249,999
1,776
1.5
$250,000 and above
2,240
1.9
Median Income
$48,201
Mean Income
$66,570
Source: Department of Commerce, Bureau of the Census.
The Census Bureau has also published estimates of the income distribution in 2005
using alternative definitions of income. Table 3 presents the distributions, by quintile,
for these alternative definitions of income. The first row, money income, shows the
income shares using the same definition of income as that shown in Table 1. Market
income includes money income except for government cash transfers, capital gains and
losses, and an imputed return on home equity. It also subtracts an estimate of work-

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related expenses.3 Post-Social Insurance Income includes money income except
government means-tested transfers, capital gains and losses, and estimated return on home
equity, and it subtracts work-related expenses. The difference between market income
and post-social insurance income is that the latter excludes means-tested government
transfers. Disposable Income includes money income, the value of non-cash transfers
such as food stamps and subsidized housing, capital gains and losses, and estimated return
on home equity. It subtracts work expenses, federal payroll taxes, federal and state
income taxes, and property taxes on owner occupied homes.4
Money income is the measure on which official estimates of poverty are based, and
it is the source for the most publicized income measures such as median household
income. Market income can be compared with post-social insurance income to assess the
effect of non-means-tested transfers like Social Security on the distribution. Comparing
post-social insurance income with disposable income shows the effect of means-tested
transfers on inequality. Finally, comparing market income with disposable income is a
way to see the effect of transfers and taxes on the distribution.
Table 3. Distribution of Household Income,
by Definition of Income, 2005
Quintiles
Lowest
Second
Third
Fourth
Highest
Money Income
3.4
8.8
14.4
23.0
50.3
Market Income
1.5
7.3
14.0
23.4
53.8
Post-Social Insurance Income
3.2
8.6
14.3
22.8
51.0
Disposable Income
4.4
9.9
15.3
23.1
47.3
Source: Department of Commerce, Bureau of the Census.
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3 Work related expenses includes items such as child care, union dues, permit and license fees,
and commuting costs.
4 The full report on alternative income estimates is available on the Census Bureau’s website at
[http://www.census.gov/hhes/www/poverty/effect2005/tables.html].

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