New National Tax Literacy Poll Highlights Need for Better Tax Education

And when you include the other federal taxes (like corporate, payroll, excise, and estate taxes), no one is left untouched. All Americans are affected by the tax code—but do they understand the tax code?

To find out, the Tax Foundation’s educational program, TaxEDU, and Center for Federal Tax Policy conducted a poll with Public Policy Polling. The poll surveyed more than 2,700 U.S. taxpayers over 18 years old—spanning the political spectrum and income distribution—to gauge Americans’ knowledge of basic tax concepts and opinions of the current tax code.

The results: most Americans are confused by and dissatisfied with the federal tax code.

Most U.S. Taxpayers Do Not Understand the Federal Tax Code

Tax literacy was a focal point of the poll for two reasons: taxpayers should understand the taxes that impact their daily lives and financial decision-making, and knowledge helps improve the tax policy debate, leading to more sound tax policy.The poll results showed that:

On average, over 61 percent of respondents did not know or were not sure of basic tax concepts related to income tax filing.

When surveyed about federal income tax rates, more than two-thirds of respondents did not know the top federal income tax rate and over half did not know how tax brackets work.

When asked which was more valuable: a $1,000 tax credit or a $1,000 tax deduction, 64 percent of respondents answered incorrectly or were unsure which provided more value when filing.

When asked about concepts frequently included in tax discussions in the media or popular discourse, 78 percent did not know the share the top 1 percent of earners pay in taxes and only 48 percent understood tax refunds were nothing to celebrate.

These results reveal a general lack of tax literacy among U.S. taxpayers.