Income Inequality Down Due to Drops in Real Incomes at the Middle and Top, But Post-Tax Income Estimates Tell a Differen

DATA USER NOTE:

On July 17, 2026, the Bureau of Labor Statistics re-released SPM thresholds for 2019-2024 following the discovery of coding errors. The U.S. Census Bureau will publish revised SPM poverty rates using these updated thresholds prior to the release of the annual poverty report in September. Refer to BLS statement and Census statement for more information.

Income inequality declined in 2022 for the first time since 2007, due primarily to declines in real median household income at middle and top income brackets, according to the Income in the United States: 2022 report released today.

The report shows real median household income dropped 2.3% to $74,580 from 2021 to 2022.

Several policies expired in 2022, including Economic Impact Payments and the expanded Child Tax Credit introduced in response to the COVID-19 pandemic, which contributed to the increase in post-tax income inequality at the bottom of the income distribution.

U.S. Census Bureau data from the Current Population Survey Annual Social and Economic Supplement (CPS ASEC) show that the declines in real income at the middle and top of the income distribution resulted in lower income inequality as measured by the Gini index — a common measure of income inequality.

Income inequality refers to how evenly income or income growth is distributed across the population. Higher income inequality represents less equal income distribution or growth.

The report provides several measures of inequality. In this article, we focus on changes in the Gini index and the ratios of income at different percentiles.

The Gini index measures income inequality ranging from 0 to 1 — reflecting the amount that any two incomes differ, on average, relative to mean income.

It is an indicator of how “spread out” incomes are from one another. A value of 0 represents perfect equality, meaning all households had the same amount of income. A value of 1 indicates total inequality, meaning that one household had all the income.

Using pretax money income, the Gini index decreased by 1.2% between 2021 and 2022 (from 0.494 to 0.488). This annual change was the first time the Gini index had decreased since 2007, reversing the 1.2% increase between 2020 and 2021 (Figure 1).

Since 1993 — the earliest year available for comparable measures of income inequality — the Gini index has increased 7.6%.

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