It takes a couple of years to finalize the income distribution data, and thus the Congressional Budget Office has just published “The Distribution of Household Income, 2022″ (January 2026). The report is mainly graphs and data, rather than analysis or policy recommendations. Here are some patterns that caught my eye.

Start with focus on the income distribution produced by the market: that is, not taking account how government tax and spending policies affect the distribution. The pattern over time shows a well-known fact that income at the top has grown more rapidly. This figure shows that average income growth for the bottom quintile has been much the same as for the middle three quintiles, while the top quintile has gained faster.

Moreover, within the top quintile it is the top 1%, and indeed the top 0.1% and top 0.01%, that has seen the fastest income growth. This pattern emerged with force in the 1990s and early 2000s, and has remained in place since then

As a broad pattern, federal income taxes do take a higher share from those with higher incomes, and federal transfer payments and refundable tax provisions do provider greater benefit for those with lower incomes. Thus, these lines will tend to be closer together when looking at after-tax-and-transfers income.

The CBO uses a standard tool called the Gini coefficient as a way of measuring inequality. At an intuitive level, the Gini measures the gap from a completely equal income distribution: thus, a completely equal income distribution would have a Gini of zero, while a completely unequal income distribution (all income goes to one person) would have a Gini of 1. (For a more detailed description of the Gini, this earlier post offers a starting point.) For perspective, countries in highly unequal regions of the world like Latin America and sub-Saharan Africa often have Gini coefficients in the range of 0.4-0.5, while countries in more equal regions like the advanced economies of Europe are closer to 0.3.

For the US, the top line shows the rise in the Gini coefficient based on market income. The category of “income before transfers and taxes” measures inequality after including income arising from benefits linked directly to earlier employment: Social Security, Medicare, unemployment insurance. The next line shows income inequality after transfers and before taxes, while the bottom line shows income after transfers and taxes.

The specific Gini coefficient number for incoem after transfers and taxes in 2022 is 0.434. While this level of inequality is toward the higher end of the range, it’s quite comparabe to the level of after-taxes-and-transfers inequality in, say, 2018 (0.438), 2012 (0.444), 2007 (0.455), 2000 (0.440), or even 1986 (0.425). At least over the last quarter-century or so, government taxes and transfers have more-or-less offset any rise in market-income inequality.

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