The Congressional Budget Office (CBO) Distribution of Household Income report published January 2026 examines how income is distributed among U.S. households and explores the means-tested transfers and federal taxes that shape that distribution.

This report includes a special focus on 2019 to 2022, which are notably the years surrounding the COVID-19 pandemic.

CBO analyzes household income on a regular basis to help Congress understand how taxes and government programs affect different income groups, and the report is one of their flagship long-term distributional studies. It covers trends from more than 4 decades, specifically from 1979 to 2022. 2020 and 2021 were significant because pandemic-era support temporarily boosted incomes of lower and middle-income households and eventually shrunk incomes once the programs expired.

CBO’s report found the average income before means-tested transfers and federal taxes grew for all income groups except the highest quintile. Once the transfers and taxes were factored in, the average income after those adjustments fell for every income group in 2022. The average income before transfers and taxes consists of market income (including wages, dividends, capital gains, interest, etc.), plus social insurance benefits (including Medicare, Social Security, and unemployment insurance). This decline reflects the expiration of the temporary expansion of unemployment compensation during the pandemic. Additionally, the average federal tax rate rose across the income distribution in 2022, due to expirations of pandemic-era expanded child tax credit and recovery rebate credits.

Furthermore, the income inequality decreased in 2022, largely because of a drop in income from realized capital gains, which primarily benefits high-income households. 2022 saw rising interest rates, and a sharp decline of stock values, a clear depreciation from the record high capital gains in 2021. Overall, the report found that from 2019 to 2022, inequality increased, even with 2022 short-term shrinking of the gap.

Data from this report highlights how federal policy can significantly reshape the income distribution, especially for older adults. Many older adult households rely on Social Security and Medicare as a majority source of income, in addition to Medicaid and SNAP for long-term care. As programs face expiration or scheduled phase-outs, this report can give context to policymakers by showing how changes in federal support can directly affect the economic stability of older adults.

Access the report here.