4 Things Most Americans Don't Know About the Middle Class
Based on income alone, the middle class is the largest demographic in the United States. It’s also one of the most misunderstood.
There are numerous misconceptions about the middle class, ranging from how much money they earn to how many Americans even qualify for the status.
Check Out: What a Middle-Class Family Budget Looked Like 50 Years Ago vs. Now
Read More: 9 Subtly Genius Things All Wealthy People Do With Their Money — That You Should Do, Too
Here’s a look at four things most Americans don’t know about the middle class.
There Is No Set Middle-Class Income
Determining what constitutes “middle class” from an income standpoint depends on many different factors, with location being the biggest.
In terms of general guidelines, a metric often cited is median income. For example, the median income of middle-class households in the U.S. was $106,100 per year as of 2022, according to a Pew Research Center analysis of government data.
But that figure doesn’t apply everywhere because of vastly different costs of living.
Most Americans might think that earning a yearly income of $150,000 puts you solidly in the middle class or higher, according to Chad Cummings, an attorney and certified public accountant (CPA) at Cummings & Cummings Law who previously worked in finance and tax.
“But I see families at that income in Florida who qualify for need-based programs after housing, insurance, property taxes and FICA,” Cummings told MoneyLion. “Geography determines class more than gross income. That figure produces one life in rural Texas and a different life in Miami.”
A SmartAsset analysis of 2024 Census Bureau data found that median incomes ranged from a low of $59,127 a year in Mississippi to a high of $104,828 in Massachusetts.
Explore More: Enter for a Chance To Win $500 in MoneyLion's Summer Break Giveaway (No pur. nec. Ends 7/4/26. See Official Rules at mlion.info/summerbreakofficialrules)
Homeownership Does Not Necessarily Build Wealth for the Middle Class
One common assumption is that owning a home is the best way for middle-class Americans to increase their wealth. But sometimes owning a home can have the opposite effect.
As an example, Cummings cited a client who purchased a home for $380,000.
“Within 18 months [the client] faced insurance premiums that tripled and a special assessment by the HOA of $28,000,” he said. “The home destroyed more capital than it created. It is a misconception to equate homeownership with a position in the middle class. Often, homeownership can be a liability.”
The Percentage of Middle-Class Households Keeps Shrinking
Most Americans might consider the middle class to be the predominant income group in the United States. That used to be true, but no longer. In fact, the percentage of Americans who claim middle-class status barely makes up more than half of total households.
In 1971, more than 6 in 10 Americans (61%) lived in middle-class households, according to the Pew Research Center. That figure fell to 51% by 2023.
Middle-Class Americans Often Pay Higher Tax Rates
Most people probably believe the middle class pays lower tax rates than the wealthy because they own fewer investment assets. But that’s not always the case.
“W-2 earners in this bracket pay effective rates that often exceed those of my clients with 10 times their net worth,” Cummings said. “The tax code rewards capital investment and asset ownership – tools [the middle class] does not consistently use. The middle class subsidizes the brackets above and below it through payroll taxes. That’s a very unpleasant truth and a function of the federal Internal Revenue Code.”
Summer spending adds up fast. Enter MoneyLion's Summer Break Giveaway for a chance to win $500 — and give your budget a break. (No pur. nec. Ends 7/4/26. See Official Rules at mlion.info/summerbreakofficialrules)
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
More From MoneyLion:
