PuMlcatton 79 (5-78)

Stock No. 048-004-01501-3

Library of Congress Card No. 61-37567

This report annually contains data on sourc- es of income, adjusted gross income, ex- emptions, total deductions, teixable income, income tax, tax credits, self-employment tax, tax withheld, and taxpayments. Also shown are foreign and domestic dividends, capital gains and losses, and selected income and tax items for States. Classifications are by tax status, size of adjusted gross income, marital status, form of deduction, and tax rates.

Suggested citation

Internal Revenue Service Statistics of Income — 1 975, Individual Income Tax Returns Washington. D.C. 1978

Statistics of Income publications are for sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402

Other recent publications tor sale

Individual Income Tax Returns, 1976 Prelimi- nary

Individual Income Tax Returns, 1974 (277 pp., $4.50)

ZIP Code Area Data, Individual Income Tax Returns, 1969 (131 pp., $1.25)

Business Income Tax Returns, 1975 Prelimi- nary (30 pp.)

Business Income Tax Returns, 1974 (231 pp., $4.00)

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Corporation Income Tax Returns, 1973 (243 pp., $4.25)

Foreign Income and Taxes Reported on Corporation Income Taix Returns, 1964, 1965, and 1966 (380 pp., $4.45)

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Personal Wealth Estimated from Estate Tax Returns, 1972 (62 pp.)

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Small Area Data from Individual Income Tax Returns, 1974 (447 pp., $6.00)

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Small Area Data from Individual IrKiome

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Income Tax, 1974 International Income and Taxes, Domestl(<

International Sales Corporation Retumsi

1972 and 1973 International Income and Taxes, Foreign

Tax Credit on Corporation Returns, 1S

1972 International Income and Taxes, U.S. C<M

rations and Their Controlled Foreign C]

porations, 1968 and 1972 Corporation Income Tax Returns, 1974

STATISTICS 1Q' OF INCOME lU

INDIYIDUAI

Department of the Treasury Internal Revenue Service

Jerome Kurtz,

Commissioner yVilliam E. Williams, )eputy Commissioner Vnita F. Alpern,

Assistant Commissioner Planning and Research)

Statistics Division

Vito Natrella,

Director Howie Wilson,

Assistant Director

Bennett R. Moss,

Chief, Planning and Review Staff

Robert A. Wilson,

Chief, Statistics of Income Branch

John P. Hiniker,

Chief, Projections and Special Studies

Branch

Fred Frishman,

Chief, Mathematical Statistics Branch

Thomas M. Durkin,

Chief, Operations Branch

This report was prepared in

the Statistics of Income Branch by the Individual

Income Statistics Section under the direction

of Jack Blacksin.

The procedures for sampling, processing,

and reviewing the data were developed by

other branches of the Statistics Division.

Statistical abstracting of the data was

done by the Service Centers at Andover.

Massachusetts; Austin. Texas: Chamblee, Georgia;

Covington. Kentucky; Fresno, California;

Holtsville. N.Y.; Kansas City. Missouri;

Memphis. Tennessee; Philadelphia, Pennsylvania;

and Ogden, Utah.

The Data Center at Detroit, Michigan,

designed and conducted the computer

processing.

n r

COMMISSIONER OF INTERNAL REVENUE Washington, DC 20224

February 23, 1978

The Honorable W. Michael Blumenthal Secretary of the Treasury Washington, D.C. 20220

Dear Mr. Secretary:

As required by section 6108 of the Internal Revenue Code, we have prepared for publication the complete report, Statistics of Income — 7975, Individual Income Tax Returns. This report, based on a sample drawn from the 82.2 million returns filed during calendar year 1976, presents estimates of taxpayers' income, exemptions, deductions, and tax, including tax credits, nontaxable returns, and returns of taxpayers age 65 or over. Major classifiers used are size of adjusted gross income. State of residence, and marital status of taxpayers. Detailed information on the components of the types of itemized deductions, the types of statutory adjustments, and on tax preferences and the additional tax for tax preferences, last available for 1973, are also shown in this report. In addition, data are presented on the earned income credit, the personal exemption credit, and the purchase of new residence credit, all enacted in the Tax Reduction Act of 1975; and on high-income returns classified by three new income concepts as defined in and required by the Tax Reform Act of 1976.

Sincerely,

Commissioner

Department of the Treasury Internal Revenue Service

III

Contents

Guide to Basic Tables

Guide to Basic Tabies, iv

introduction, V

Requirements for Filing, v

Changes in Law, vi

Section 1

Returns Fiied and Sources of in- come, 1

Section 2

Deductions and Exemptions, 43

Section 3

Tax Computation and Tax Rates, 65

Section 4

Taxpayers Age 65 or Over, 115

Section 5

State and Regional Data, 121

Section 6

Explanation of Classifications and

Terms, 16S

Section 7

Sources of the Data, Description of the Sample and Limitations of the Data, 179

Section 8

1975 Forms and Instructions, 189

Section 9 Index, 231

Section 1

Returns Filed and Sources of In- come

Cumulated income and taxes (table 1.1), 5

Nonjoint returns by marital status (tables 1 .2,

1.3), 7,12

Sources of income (table 1 .4), 13

Joint returns (table 1 .5), 18

Computation of adjusted gross income (table

1.6), 22

Nontaxable returns (table 1 .7), 29

Returns with presidential election campaign

fund checkoff (table 1 .8), 33

Form 1 040A returns (tables 1 .9, 1.10), 34,35

Returns by size of income under alternative

concepts (table 1.11), 39

Section 2

Deductions and Exemptions

Itemized deductions: By type (table 2.1), 47

Sources of Income by marital status (table 2.2), 49

Taxes paid deduction (table 2.3), 50 Contributions deduction (table 2.4), 52 Medical and dental expenses (table 2.5), 53 Miscellaneous deductions (table 2.6), 55 Interest paid deduction (table 2.7), 57 Investment interest expenses (table 2.8), 58 Exemptions, by type (table 2.9), 59 Exemptions, by marital status (table 2.10), 64 Returns filed by dependents with unearned income (table 2.11), 64

Section 3

Tax Computation and Tax Rates

Type of tax computation (table 3.1 ), 73 Special income averaging tax computatloa (table 3.2), 76 Maximum tax on earned income (table 3.3), 771 Sales of capital assets (table 3.4), 79 Total income tax (tables 3.5, 3.6), 81,86 Income tax before credits (table 3.7), 88 Additional tax for tax preferences (table 3.8)

Taxpayments (table 3.9), 92

Tax overpayment (table 3.1 0), 97

Tax due (table 3.11), 102

Tax generated by rate (tables 3.12, 3.13),

105,111

Section 4

Taxpayers Age 65 or Over

Sources of income (table 4.1), 116 Itemized deductions (table 4.2), 119

Section 5

State and Regional Data

Sources of income (table 5.1), 124

Itemized deductions (table 5.2), 129

Exemptions (table 5.3), 133

By size of adjusted gross Income (table 5.4)

137

Introduction

Requirements for Filing

The data presented in this report are esti- mates based on a stratified sample of individual income tax returns, selected before audit, and represent coverage of the 82.2 million Forms 1040 and 1040A filed by the Nation's taxpayers for income year 1975. Coverage of returns below the income levels described under "Requirements for Filing" was generally limited to persons filing for a refund of income tax withheld or for self-employment tax purposes. In addition, for Tax Year 1975, the introduction of the "earned income credit" (described under "Changes in Law") made it beneficial for certain low-income persons to file returns, even if they did not meet the filing requirements.

The Internal Revenue Code of 1954, as amended, provided the legal basis for tax activity detailed in this report. Revisions to the Internal Revenue Code which affected the comparability of some of the data in this report with data presented for previous years are described under "Changes in Law."

The principal criterion which determined whether an individual had to file a return was the size of gross income (defined as all income received in the form of money, property, and services, that was not, by law, expressly exempt from tax). For 1975, a return had to be filed by:

(a) a single person (other than a surviving spouse) under 65 with gross income of at least $2,350 (as compared to a $2,050 filing require- ment for 1 974);

(b) a single person (other than a surviving spouse) age 65 or older with gross income of at least $3,100 ($2,800 for 1974);

(d) a sun/iving spouse age 65 or older with gross income of at least $3,400 ($2,800 for 1974);

(e) a mamed couple, neither of whom filed a separate return, with both spouses under 65 and a combined gross Income of at least $3,400 ($2,800 for 1974);

(f) a married couple with one spouse age 65 or older and with a combined gross income of at least $4,150 ($3,550 for 1974);

(g) a married couple with both spouses age 65 or older and with a combined gross income of at least $4,900 ($4,300 for 1974);

(h) a marled person (regardless of age) whose spouse was filing a separate return (e.g., to obtain a refund of Income tax withheld), if that married person had a gross income of $750 or more (no change from 1 974).

In addition, as was true for 1974, children claimed as dependents on their parents' re- turns had to file if they had gross income of $750 or more and received any "unearned income" (such as dividends, interest, or capital gains); and self-employed persons with "self- employment income" of $400 or more had to file in order to pay self-employment tax.

Changes in Law

There were two major laws enacted which affected the comparability of some of the data presented In this report with those presented in previous years, the Tax Reduction Act of 1 975 and the Employee Retirement Income Security Act (ERISA) of 1974. Both of these laws had provisions which had already gone into effect for 1974; however, their major provisions became effective for Tax Year 1975.

For Tax Year 1 974, the Tax Reduction Act of 1975 had provided for a one-time rebate of taxes paid of up to $200 per taxpayer. For 1975, the following provisions were introduced to reduce a taxpayer's tax liability:

(a) an increase of up to $600 in the "standard deduction;"

(b) an "exemption credit" of $30 per exemption other than age or blindness;

(d) a "purchase of residence credit" of up to $2,000 for taxpayers who had purchased a new principal place of residence;

(e) an increase in the amount of time (from 12 to 18 months) allowed to purchase a replacement residence in order to postpone the taxation of the gain realized from the sale of the old residence (not related to (d) above);

(f) an increase in the "investment credit" from 7 percent to 10 percent of qualified investment property;

(g) an expansion of the work incentive (WIN) credit to take account of the Aid to Families with Dependent Children (AFDC) program under the Social Security Act provi- sions.

In addition, under the Employee Retirement Income Security Act of 1974, employees who were not covered by qualified retirement plans were allowed to set up their own "individual retirement accounts," popularly referred to as IRA's, and deduct as much as $1,500 for contributions to the account in arriving at adjusted gross income.

One more benefit for individual teixpayers was included as an amendment to Public Law 93-625, an act to amend the tariff schedules. It raised the maximum amount allowed taxpayers claiming a credit or deduction for contributions to candidates for public office.

A description of each of these benefits is given in section 6, Explanation of Classifica- tions and Terms. The data for these items are shown primarily in section 2, Deductions and Exemptions, and section 3, Teix Computation and Tax Rates.

Section 1

Contents

Introduction, 1

Number of returns filed, 1

Adjustments to gross income, 2

Higfi-income returns, taxable and nontaxable,

Text tables

1A Sources of income and selected tax items, 1974 and 1975,1

16 Number of returns by marital status and size of adjusted gross income, 2

1C Returns with payments to an Individual Retirement Account and returns witfi self- employed retirement deduction, 3 ' ID Number of nontaxable returns, classified by size of adjusted gross income and by size of various other income concepts, 3

Charts

1A Returns filed, 1966-1975 by size of adjust- ed gross income, 2

Basic tables

1.1 Selected income and tax items, by size and accumulated size of adjusted gross income, 5

1.2 Nonjoint returns: adjusted gross Income, total deductions, exemptions, and tax items by size of adjusted gross income, 7

1.3 Nonjoint returns: sources of income by marital status, 12

1 .4 All returns: sources of income, deductions, and tax items by size of adjusted gross income, 13

1.5 Joint returns: sources of income, deduc- tions, and tax items by size of adjusted gross income, 18

1.6 All returns: computation of adjusted gross income, 22

1.7 Nontaxable returns: sources of income, deductions, and tax items by size of adjusted gross income, 29

1.8 Returns with and without presidential campaign fund checkoff: response boxes

- checked by marital status and size of adjusted gross income, 33

1.9 Form 1040A returns: sources of income and income tax after credits by marital status, 34

1.10 Form 1040A returns: sources of income, deductions, and tetx items by size of adjusted gross income, 35

1.11 All returns, taxable returns, and nontaxa- ble returns: number of returns, income, deductions, and credits, by size of income under alternative concepts, 39

Returns Filed and Sources of Income

Introduction

The data presented in this section cover primarily the number of returns for 1975 and the sources of income, including the adjust- ments to gross income, reported on these returns, classified by size of adjusted gross Income and by marital status. Major character- istics, such as sources of income and selected tax items, of the returns filed for 1975 com- pared to 1974 are summarized in table 1A. Special topics for which data are presented are nontaxable returns, high-income returns, re- turns of taxpayers filing Form 1040A, returns with the presidential election campaign fund checkoff, and returns with individual retirement accounts and self-employed retirement deduc- tion.

Number of Returns Filed

The Tax Reduction Act of 1975 raised the income requirements for filing an individual

income tax return by increasing the amount of the "standard deduction" (by as much as $600 for certain taxpayers; see section 2 for the specific changes). This change was a major reason for fewer returns being filed for Tax Year 1975, about 82.2 million compared to about 83.3 million for 1 974. Summary informa- tion on the number of returns filed, by marital status, for 1975 compared to 1974 is shown in table 1B, while additional Information on the number of returns filed for the 10-year period 1 966-1 975 is shown in chart 1 A.

Some of the decrease in returns filed caused by the change in the standard deduction may have been offset by the introduction of the "earned income credit," also provided for by the Tax Reduction Act of 1975. This credit was a refundable amount which could be returned to a qualifying individual regardless of any tax liability, resulting in certain individuals filing returns when they were not otherwise required to in order to claim the credit. (See section 3 for a description of and data on the earned income credit.)

Table 1A.— Sources of Income and Selected Tax Items, 1974 and (All figures are estimates based on samples— money amounts are in thousands ol dollars]	1975
Item	1974	1975	IncreaM or decrease (— ), 1975 over 1974
	(1)	(2)	(3)
	S3,3«>,tM 67,334.767 16.005.423 905,523.257 758,629.835 39.047,111 4,9%.196 11.012,554 2.576,524 13,470,125 20,887,969 39,543,264 3.811,349 1,619,530 2,331,536 20,701,059 13,102,795 573,605,736 1,614,869 123,464,526 142,574 123,607,100 3,289,118 127,003,401	82,229,332 61.490.737 20,738,595 947.784,873 795,399,462 39,421,476 3,563,321 10,751,319 2.059.772 14,071,891 21.892,126 43,433,554 3,432,694 1,769,380 2,554,324 24,537,551 15.101,999 595,492.866 8,069,846 124,382,197 144,100 124,526,297 3,376,047 127,938,931	—1,110,850
Taxable	—5,844.030
	4.733,172
	42,261,614
Sources of income
	374,365
	—1,432,874
	-261,238
	—516,752
	601,766
	1,004,157

	—376,652
	149,650

	3,836,493
	1 999 205

Total credits	6,454,976 917.673
Adrtitionai tax for tax preferences	1,525 919.196
Self-employment tax	66.927 935.532

'Comprises income from pensions and annuities in adjusled gross income, gains and losses from sales o( property other than capital assets. Stale income tax refunds, alimony, and other income or loss,

"Compnses sick pay exclusion, moving expense deduction, employee business expense deduction, sell-emptoyed retirement deduction, and tor 1975, payments to an Individual Reliremanl Account and forfeited interest penalty,

'The sum of total income tax, self-employment tax, social security taxes on tip income, tax from recomputing prior year investment credit, tax Irom recomputed prior-year work incentive (WIN) credit, tax on premature distributions, excess contributions tax, and "other" taxes.

NOTE Detail may not add to total because of rounding.

Individual Returns/1975 • Returns Filed and Sources of Income

Chart 2A

Distribution of returns by form of

deduction 1966-1975

Minimum standard deduction prior to 1970.

Percent 100

Percent standard deduction

Adjustments to Gross Income

Adjustments to gross income included ex- penses incurred by business men and women or by farmers in thie course of running a business, as well as certain expenses of employees such as moving or travel expenses. Sole proprietorship expenses were reported on Schedules C and F (or, in the case of partnerships or Small Business Corporations electing to be t6ixed through their shareholders, on the appropriate forms filed by those enti- ties), and are detailed in the reports Statistics of Income — Business Income Tax Returns and Statistics of Income— Corporation Income Tax Returns.

Expenses of employees were reported on Form 1040 and are shown in this report as "statutory adjustments." These adjustments were comprised of sick pay exclusion; moving expense deduction; employee business ex- pense deduction; self-employed retirement deduction; forfeited interest penalty (for the premature withdrawal of funds from a time savings account); and, beginning with Tax Year 1975, payments to an "individual retirement account" (IRA). Data for these types of statuto- ry adjustments, last available for 1973, are shown in this report in table 1 .6.

Individual retirement accounts were provided for by the Employee Retirement Income Securi- ty Act of 1 974 to allow employees not covered by qualified pension or retirement plans to set up their own plans. Employees were allowed to

Table 1B.— Number of Returns by Marital Status and Size of Adjusted Gross Income

[All figures are estimates based on samples]

size of adjutted groM Inconw ■nd mjrttil itatut

Totjl

Joint returns ol trusbands and wtves Separate returns ol husoands and wives Returns ol heads ol nousenolds

Returns ol surviving spouses

Returns ol single persons

Und«f JS.OOO. loUl'

Joint returns ol husbands and wives Separate returns ol husbands and wives Returns ol heads 01 households Returns ol surviving spouses Returns ol single [jersons

>5.000 und«f SIO.OOO, total

Joint returns ot hust)ands and wives

Separate returns ol husbands and wives Returns ot heads ot households Returns ot survrving spouses Returns ot single persons

S10.000 undar ttS.tnO. total

Joint returns ot husbands and wives

Separate returns ol hustiands and wives

Relums ol heads ot tiouseholds

Returns ol surviving spouses

Returns ot single persons

115.000 or mora, total

Joint returns ol husbands and wives Separate returns ol hust)ands and wives Returns ol heads ol households Returns 01 sunming spouses Returns ol singte persons

'Includes returns witti no adjusted gross income NOTE Detail may not add to total because ot rounding

contribute to such plans the lesser of $1 ,500 or 15 percent of their "earned income," and they could deduct their contributions from gross income to arrive at adjusted gross income. (See "Individual Retirement Account" in sec-

(3,340,1m

44,226.527

2.355,106

4,687,619

213,520

31,657,218

2«,7«<,673

4,771.422 1,093,369 1,525,142 65.463 19,291.237

20,Sa«,617

9,398.955

606,717

2,093.261

54,569

6,233,115

15,e70.25<

11,629,562

343.802

736,951

39,760

2,916,163

20,316,642

330,465

33,706

1,414,663

•2,22<.332

44,140,085

1,938,613

4,963,339

155,521

31.011,574

24.M1.aS]

4,909,737

643,868

1,489,206

55,641

17,603,201

19.952,914

6.674.764

660,027

2,069,636

44,236

8,284,051

14,9e3.6<0

10,316,373

307,693

934,904

27,029

3,377,681

22,410,8<5

20,039,211

127,225

469,393

28,415

1,746,641

Clianga, 1974 to 1975

—86,442

-416,293

295,520

-57,999 -645,644

-1,S<4.I90

136,315

-249,521

-35,936

-29,642

-1,686,036

-633,703

-524,191

-146,690

-3,425

-10,333

50,936

-70(,S7l«i

-1,313,199'! -36,109 1 195,953 -12,731 459.496

2,0»4,!43

1,612,523 16,027 I 138.926 -5,293 331,956

tion 6, Explanation of Classifications and Terms.) Data for returns with payments to an individual retirement account as well as for , returns with self-employed retirement deduc- tion are presented in table 1 C.

Individual Returns/1975 • Returns Filed and Sources of Income

Table IC— Returns with Payments to an Individual Retirement Account and Returns with Self — Employed Retirement Deduction

[All figures are estimates based on samples— money amounts are in thousands of dollars]

SourcM of incom* or lot*

Totll number of returns

Returns wilti payments to an indhridual retirement account:

Number ol returns

Adjusted gross income less deficit

Aniount oT deduction

Salaries and wages:

Number ol returns

Amount ot salanes and wages

Amount ol deduction

Returns wittr self-employed retirement deduction:

Number of returns

Adjusted gross income less rfefidt

Amount of deduction

Business nel profit less loss:

t^umtwr of returns

Amount ot business net profit less loss

Amount of deduction

Farm net profit less loss:

Number of returns

Amount of farm net profit less loss

Amount of deduction

Partnerstiip net profit less loss:

Number of returns

Amount ot partnership net profit less loss

Amount of deduction

Small Business Corporation net profit less loss:

Number ot returns

Amount ol Small Business Corporation net profit

less loss

Amount of deduction

Size of adjuatad grosa Income

1.211.794 30.823.108 1.436.443

1.026.019

20,846,015

1,213,130

595,892 21.479,553 1.603.788

374,982 9,819,334 1,061.923

97,696

1,595,613

235,565

166,116

4.269,834

622,323

32.228 58.903

Under (5,000

22,638 52,171 12,310

12,519 93.716 7.256

14.371 24,871 9,143

7,859 31,661 6,709

3,519 9,074 1,083

935

-34.783

1.528

-2.417 250

15,000 under (10,000

132.543

1.063.818

100.579

101.856 809.510 72.966

44.614 351.045 39.253

24.970 170.056 21.664

8.765 46.992

7,721

21.984 6.716

(10,000 under (15,000

215,407

2,710,018

217,764

184,969

2,175,070

186,974

80,233 995,636 81,357

42,992 398,953 44,830

11,282 84,258 8,944

11.602 94.601 17.655

(*) Estimate is not stiown separately because otttie small number of sample returns on wtiicti it was based However, the data are ir the appropnate totals NOTE: Detail may not add to total because of rounding

(15,000 or more

841.206

26.997.101

1.105.792

726.676

17.767.719

945.934

456.674

20.toe.ooi

1.474.036

299.161

9.218.664

988.720

74.130 1.455.289

147.310

4,168.032

596.424

38.049 58,219

was required to file a Form 4625 to compute an additional tax. For such taxpayers, "total tax preferences" as tabulated in table 1.11 also included the following items from Form 4625: the excess of accelerated depreciation on certain real property and property subject to a net lease over depreciation computed under the straight-line method; the excess of rapid amortization allowable on certain capital ex- penditures (such as pollution control facilities) over the normal depreciation deduction other- wise allowable; the excess of percentage depletion over the adjusted basis of the property; the unrealized gain on the exercise of stock options; and the amounts set aside as bad debt reserves by financial institutions in excess of the amounts needed on the basis of actual past experience.

The purpose of adding tax preferences to adjusted gross income was to obtain a mea- sure of total income which treated various sources of income more nearly equally, i.e., to include the full amount of each source, before any exclusions or reductions allowed under the Internal Revenue Code. Similarly, the purpose of subtracting investment interest was to obtain a more nearly equal treatment of various types of expenses. In making out their teix returns, taxpayers who bon-owed money for investment purposes included the gross income from those

High-income Returns, Taxable and Nontaxable

The Tax Reform Act of 1976 mandated the annual publication of "information on the amount of tax paid by individual taxpayers with tiigh total incomes," as well as "the number of such individuals . . . who owe no Federal income tax." The law specified that, in addition to adjusted gross income, three new income :oncepts were to be used as classifiers: adjusted gross income plus tax preferences; adjusted gross income less investment interest; and "expanded income," which was arrived at oy both adding tax preferences to and subtract- ng Investment interest from adjusted gross ncome.

Neither tax preferences nor investment nterest were available in a pure form from the ax return. In the case of tax preferences amounts of income afforded special tax treat- nent) only two were available for all taxpayers: he dividend exclusion of up to $100 per axpayer receiving qualified dividends and the capital gains exclusion, equal to one-half the sxcess of net long-term capital gains over net ihort-term capital losses. If the sum of the ixcluded capital gains plus other tax preferenc- )s subject to the additional tax for tax prefer- inces (i.e., the "minimum tax") exceeded ;30,000 ($15,000 in the case of manied lersons filing separate returns), the taxpayer

Table ID.— Number of Nontaxable Returns, Classified by Size of Adjusted Gross Income and by Size of Various Other Income Concepts

	[All figures are	estimates based	on samples)
	Total number ol returns	SJzs of sxpanded Income
Stia ol adjusted grosa Income	Under (50.000	(50.000 under (100,000	(100.000 under (200.000	(200,000 under (500,000	(500.000 or more
	(1)	12)	(3)	(4)	(S)	(•)
	20,73«,5«5 20.732.617 4.984 734 204 56	20.731,aM 20.730.714 1.052 110 19 3	5.720 1.691 3.764 226 36 3	767 171 147 388 54 7	171 32 J 94 14
Under (50.000
$50,000 under $100,000	[ I
$100,000 under $200,000
$200,000 under $500,000
$500,000 or more	30
	Size ot adjusted gross Income plus tax preferences
Stie ot adjuatad groaa Income	Under (50,000	(50.000 under (100,000	(100,000 under (200.000	(200.000 under (500.000	(500,000 or more
	m	(8)	(»)	(10)	(11)
Total	20,729,691 20.729.691	7.250 2.695 4.555	1.291 182 408 701	2(2 40 21 33 198	71
Under $50,000
$50,000 under $100,000
$100,000 under $200,000
$200,000 under $500,000
(500.000 or more


Sba ol adjuatad groaa Income	Under (M,000	(50.000 under (100,000	(100,000 under (200,000	(200,000 under (500,000	(500,000
	(12)	(13)	(14)	(15)	(t«\|
	20,734,179 20.732.617 1.396 136 27 3	3,e«4 3.588 240 32 4	42« 358 61 7	99 84 15	27

$50,000 under $100,000

$200,000 under $500,000
$500,000 or more	27

NOTE: Detail may not add to total because of rounding

Individual Returns/1975 • Returns Filed and Sources of Income

investments in their adjusted gross Incomes, and deducted the interest on the borrowed money as part of their itemized deductions. This was in contrast to the tax treatment of businessmen and women and farmers, who deducted their business expenses from their business incomes and included only the net amount in their adjusted gross incomes. In other words, the purpose of subtracting invest- ment interest from adjusted gross income was to have an income concept that included the "net" amount of investment income (income less allocable expenses) just as It included the "net" amount of business or farm income.

Since most taxpayers were not required to Identify on their returns all of the interest on amounts borrowed strictly for investment pur- poses, it was necessary to approximate an amount of "investment Interest" for the statis- tics. The method used was to consider all interest deducted other than the amount reported on the separate "home mortgage interest" line as being potential Investment interest. However, the amount tabulated for purposes of table 1.11 as Investment interest expense was limited so as not to exceed the amount of investment Income (interest re- ceived, dividends, and capital gains) included In the taxpayer's total income.

Since four different income concepts were used for table 1.11, and since these concepts contain differing amounts of investment in- come, the investment Interest expense was limited depending on the Income concept being tabulated. Thus, for those income concepts which did not Include tax preferences (adjusted gross income and adjusted gross Income less investment interest), dividends after exclusion and one-half excess net long-term capital gains were used as the basis for computing Invest- ment Interest expenses. However, for those income concepts which Included tax preferenc- es (adjusted gross income plus tax preferences and expanded Income), dividends before exclu- sion and the full amount of net long-term capital gains were used. A step-by-step de- scription of this computation is shown under "investment interest" In section 6, Explanation of Classifications and Terms.

Teible 1 D shows the shifts in the number of returns from one income class to another that resulted from adding tax preferences to adjust- ed gross income, from subtracting investment Interest, and from making both adjustments. Depending on which income concept was used, the number of "high-income nontaxa- bles" (returns with "total Income," the defini- tion of which varies by income concept, of $200,000 or more and no "total Income tax") for 1 975 varied from 1 26 to 363.

Individual Returns/1975 • Returns Filed and Sources of Income " Table 1.1— Selected Income and Tax Items, by Size and Accumulated Size of Adjusted Gross Income [All figures are estimates based on samples— money amounts a/e m thousands of dollars]	s
sin wid tccumulatvd ttze of	AH r«um»		TaxaMa ratuma
Ratunit	Adiuated groaa Income leaa daflcn
Numbw	Pwcwt of total	Ainouit	Paicant of total'	Avaraga (Dobra)	ftotuma	laaa datlclt
NumMr	Paroam of total	Amount	total'
Stn of AdKistid Grou Inconw ' Total	(1)	(2)	(31	(4)	(5)	l»	(7)	(«)	(•)
82,229,332 643.791 4,738,776 5.407,486 5,002560 4,565,790 4,543,446 4,737,247 4,164,112 3,649,630 3.725.148 3.476,777 3,282.636 3.120,493 2,950,537 2,926,377 2,683,637 10,353,534 5,596,117 2,74«255 2,747,618 761,406 152,349 29,193 3,289 1,124 643,791 4,738,778 10.146,266 15,148,626 19,714,616 24,258,062 28,995,309 33,159,421 37,009,051 40,734,199 44,210,976 47,493,612 50,614,105 53,564,642 56,491,019 59,174,656 69,526,190 75,126,307 77,870,562 60,616,160 61,399,566 61,551,935 61,581,128 81,564,417 61,565.541 82229.332 1,124 4,413 33,606 185,955 967,361 3,714,979 6.459,234 12,057,351 22,410,865 25,094,522 26,020,899 30,971,436 34,091,929 37,374,565 40,651,342 44,576,490 48,426,120 52,590.232 57,327,479 61,870,925 66,436,715 71,439275 76,846,763 61,585,541 82229,332	100,0 0.6 5.6 6,6 6,1 5.6 5.5 5J 5.1 4.7 4.5 42 40 3,8 3.6 3.6 3,3 126 6,8 33 3,3 1,0 02 n PI 1") 0,8 58 123 18.4 24.0 29,5 353 40,3 45.0 495 53,6 578 616 65,1 687 720 646 914 94.7 980 99.0 99.2 992 992 99.2 100-0 n n 0,2 12 45 79 147 27.3 30,5 34,1 377 41,5 45,5 49,7 542 58.9 64,0 697 75.2 60.6 86,9 93.5 992 100,0	»47.7e4,«73 -6,304,555 2,713,830 6,072359 12446,382 15,956,144 20,491,960 25,971,457 27,016,980 26,852746 31,674,144 33,030,353 34,469,130 35,890,291 36,865,639 39,501,373 38,893,332 178,968,121 124,310,576 74,624,652 100,168,142 51,550,859 19,918,461 6,149,944 2187,947 2,344,606 -6,304,555 2713,830 10,766,168 23232,571 39,168,714 59,680,674 65,652131 112,669,111 141,521,857 173,196,M1 206,226,353 240,695,484 276,585,775 313,471,414 352,972,787 391,666,119 570,834240 695,144,816 769,769,468 869,937,610 921,488,469 941,406,930 949,556,874 951,741,820 954,089,426 947,764,671 2344,606 4,532,552 12,682497 32600,957 84,151,616 164,319,958 258,944,610 383.255,186 562223,307 601,116,639 640,618,012 677,503,651 713,393,942 747,663,073 780,893.426 812567,570 841,420,315 868,437^95 894,408,752 914,900,712 930,856,856 943,303,238 951,375,596 954,069,426 947,764,871	100.0 0.3 0,9 1,3 1,7 22 27 29 3,0 3,3 3,5 3.6 3.8 3,9 42 41 189 131 7,9 10,6 54 21 0,9 02 02 ol 11 24 4,1 63 90 11.8 14,8 182 21.6 252 29.0 329 37 0 41 1 59,8 729 80.7 912 96.6 98.7 99.5 99.8 100.0 100,0 02 0.5 IJ 3,4 8.8 19.3 27.1 402 58.9 63.0 671 71.0 74,8 784 61.8 852 68.2 91.0 93,7 95.9 97.6 98.9 99.7 100.0 100.0	11,526 -8.793 573 1,433 2488 3,495 4J10 5,482 6,488 7,495 8.5(X3 9500 10,SO0 11,501 12501 13,496 14,493 17296 22.206 27,193 36,456 65,972 130,742 279,175 665232 2085,948 -9,793 573 1.063 1,534 1.968 2460 2954 3,398 3,824 4252 4,665 5,068 5,465 5,852 6248 6,622 8210 9253 9,885 10,791 11,321 11,544 11,639 11,666 11.694 11,526 2085,948 1,027,091 377,388 175,316 86,991 49,615 40,089 31,786 25,067 23,954 22.862 21.875 20,926 20,010 19,115 18229 17,375 16513 15,602 14,767 14,011 13204 12380 11,694 11,526	61,490,737 1,710 CI 53275 1,318,430 2707,773 3,085,734 3,441.210 3.483.357 3,544,369 3,520,076 3,349,347 3206,050 3,065,527 2.908.541 2887.385 2656.769 10260.328 5.571.007 2733,934 2734,473 776,422 151,615 28,989 3245 1,112 1,710 (•) 53,332 1571,762 4,079,535 7,165,269 10,606,479 14,069,836 17,634205 21,154^83 24,503,630 27,709,680 30,775^07 33,683,748 36,571,133 39227,902 49,488,230 55,059237 57,733,171 60,527,644 61,304,066 61,455,681 61,484,670 61,487,915 61,489,027