According to the Joint Congressional Committee on Taxation, the average U.S. taxpayer pays 10.1% in income taxes. Many at the bottom pay little or no income tax at all, and some even receive more back in credits than they pay in. On the other hand, the top federal marginal rate is 39.6% with several brackets in-between.

While income tax is important, it does not give us the whole picture. There are a couple other primary ways we are taxed at the federal level.

Payroll Taxes

Social Security and Medicare tax is a large burden for many taxpayers, particularly those toward the bottom rung of the ladder. Those who are employed have 7.65 % of their income withheld for payroll tax while the employer kicks in the other 7.65%. Those who are self-employed are responsible for the entire 15.3% tax. Payroll taxes are only levied on annual earnings up to $118,500. This means higher income earners pay a lower percentage of their overall income for this tax.

Excise Taxes

The federal government levies taxes on numerous goods and services we use on a regular basis. Examples include alcohol, cigarettes, gasoline, airline travel, telephone service and many others. Most of these taxes are barely noticed because they are priced into the product or service. For example, on each gallon of gasoline you purchase, 18.4 cents goes to the federal treasury, but the only thing that concerns most consumers is the overall price they are paying at the pump.

When you total up the income, payroll and excise taxes paid by Americans, the average taxpayer actually pays between 20% and 25% in federal taxes. Those at the bottom average a little over 10% and those at the top average between 30% and 35%. This, of course does not take into account state and local income, sales and property taxes. Depending on the state and locality in which you live (and your spending habits), state and local taxes can bring this figure up to 50% or more.

There is no doubt taxes eat up a large chunk of our hard-earned income each year, and many of the taxes we pay are virtually impossible to avoid. There are strategies, however, to lower your income taxes and put you in a better overall financial position. Speak with a local accounting firm to find out what can be done to minimize your tax liability.