Inflation-adjusted median income rose to $87,460 in 2025
of ConsumerAffairsReal median household income increased 2.6% in 2025 to a record $87,460.
After taxes and tax credits, median household income rose 3.1% to $76,060.
Income at the top increased for a third straight year, but households near the bottom experienced no statistically significant gain.
It might not have felt like it, but the typical American household earned more in 2025 than at any other point on record. However, the gains were not shared equally across the income spectrum.
Real median household income reached $87,460 last year, up 2.6% from $85,210 in 2024, according to a new U.S. Census Bureau report. The figures are adjusted for inflation, allowing income levels to be compared over time.
The 2025 total was the highest recorded since the Census Bureau began tracking the measure in 1967. It also surpassed the previous high reached before the COVID-19 pandemic.
Median income represents the midpoint of all households: Half earned more than $87,460 and half earned less. It does not mean that every household received a 2.6% raise.
After-tax income also increased
The Census Bureau also examined how much income households had after accounting for federal and state taxes, payroll taxes and tax credits.
Median post-tax household income increased 3.1%, from $73,760 in 2024 to $76,060 in 2025.
However, the after-tax figure did not set a record. It remained below levels recorded in 2020 and 2021, when pandemic stimulus payments and expanded tax credits temporarily boosted household resources.
For consumers, the increase in inflation-adjusted income suggests that the median households earnings grew faster than the cost of living during 2025. That should translate into somewhat greater purchasing power, although the improvement may not be apparent to households facing especially large increases in housing, insurance, energy or health care costs.
Higher earners made greater progress
The headline figure also masks a continuing divide between households at the top and bottom of the income distribution.
Income at the 90th percentile increased for the third consecutive year, both before and after taxes. By comparison, income at the 10th percentile did not change significantly between 2024 and 2025.
That gap becomes more striking over a longer period. Since 1967, inflation-adjusted household income at the 10th percentile and the median has increased by about 56%. Income at the 90th percentile has risen approximately 121%.
Households at the 90th percentile earned about 13 times as much as those at the 10th percentile in 2025. In 1967, the ratio was about nine to one.
The figures show that while overall household income has reached a historic high, much of the long-term growth has been concentrated among higher earners. For lower-income consumers, the latest report points to little measurable improvement in their ability to absorb rising living expenses or unexpected bills.
Photo By CNET
Posted: 2026-09-18 10:51:47
