The IRS’s preliminary data indicate that total tax liability for the 2014 tax year rose to $1.4 trillion owed, as reflected on more than 101 million returns. This figure increased from the $1.3 trillion reported for some 98.8 million returns filed in TY 2013. Although total tax liability increased for all income categories, taxpayers with adjusted gross income of $250,000 or more experienced the steepest percent change in tax liability, with a 15.9% increase from 2013 to 2014 (calculated from the $622.2 billion owed for 2013 versus the $721.2 billion owed for 2014), the IRS reported. Overall, total tax liability increased by 10 percent over 2013’s figure, for a total of $1.4 trillion.
The increase in tax liability is likely the result of continued growth in capital gains distribution. For TY 2014, the capital gains distribution rose to nearly $79 billion, up nearly 75% from TY 2013’s $45.2 billion. In addition, net capital gains increased 34.4 percent to $586.5 billion. The amount of net capital gains reported on tax returns with $250,000 or more in adjusted gross income increased by $120.89 billion (from $323.42 billion for 2013 to $444.31 billion for 2014).
The continued increase in net capital gains may have likely contributed to the increase in the number of taxpayers in the highest tax brackets, which may, in part, explain the overall increase in tax liability between 2013 and 2014. For example, the preliminary data for 2014 indicates that there were 431,477 more taxpayers in the $250,000 and up income category who reported net capital gains than there were for 2013. In addition, the corresponding increase in taxpayers for the $200,000 to $250,000 income category was 273,322 for 2014. The data show that all income categories, except that for AGI from $30,000 to under $50,000, experienced an increase in the number of tax returns reporting net capital gains.