Business Income Reached $1 Trillion in 2020: Report
Taxpayers reported $12.7 trillion of total income in 2020, with approximately $1 trillion accounting for business income through S corporations, sole proprietorships, and partnerships.
According to the Tax Foundation, more than 164 million Americans filed income tax paperwork in 2020, the third filing year since the federal Tax Cuts and Jobs Act. The Tax Foundation's research included reported income solely on 1040 forms.
The research showed the majority of filers, more than 130 million individuals, reported income from wages and salaries totaling $8.4 trillion. Business income made up $1 trillion of the overall personal income, with pass-through entities "dominating" the tax filing structure for businesses.
"A pass-through tax is not taxed at the business level, but instead, immediately “passed through” to individual owners’ tax returns using schedules C, E, and F", the report notes.
"Pass-through firms employ most of the private-sector workforce in the U.S. and account for most business income", the report stated.