Many of us identify as middle class. It provides us with an identity that is respectable, and implies that we are “normal.”
After all, if you are middle class, you aren’t stuck with some of the stigmas that can come with being poor, and you are painted with the elitist brush for being rich. The middle class is a comfortable place to be for many of us.
It also helps, too, that middle-class identity is probably deeply ingrained in your psyche.
Many of the children of Baby Boomers (I’m one) grew up in the middle class, espousing “middle-class values.”
My experience was one of being poor until I was about 12 since my parents got married relatively young and started having kids.
Then, once my dad finished school and began making more money, we moved into a middle-class neighborhood, able to afford the necessities of life, and some of the luxuries.
The middle-class mentality, for many in my generation, is based on similar experiences: Remembering the poor life as our parents initially struggled, but enjoying greater comfort as they began earning more.
But, the middle class is more than just your own mindset. It also includes numbers.
Many of those who have a middle-class mentality might not actually be considered middle-class when it gets right down to income.
Table of Contents
How Is a Middle-Class Income Defined?
It’s actually harder to define a middle-class income than you might expect.
Here are four different ways (and there are probably more points of view) to look at your income in terms of whether or not it’s middle class:
1. Economic Percentile: Rather than just looking at arbitrary cutoffs, some economists consider the middle class according to percentile. If you are in the top 20% of income earners, you are considered to have an upper-class income or be rich.
Those whose incomes fall in the bottom 20% are considered poor. Everyone else (the middle 60%) is middle class.
2. Median Income: Others take a look at the median annual income, and then go $20,000 to either side. In 2022, the Census Bureau reported that the median income in the United States was $64,240, so if you go a little lower or higher, you get a middle-class range of between about $40,000 and $80,000 a year.
3. Cost of Living Adjusted Income: This approach takes into account the varying cost of living in different areas. For instance, earning $50,000 a year might be considered middle class in a small town but not in a high-cost urban area like New York City or San Francisco. By adjusting income levels to the cost of living in a specific area, you can get a more accurate sense of whether an income is truly middle class for that region. For example, a cost of living calculator can adjust incomes to reflect what being middle class means in different cities and states.
4. Disposable Income and Debt Levels: Another way to look at middle-class income is to consider disposable income and debt levels. This approach focuses not just on gross income, but on how much money people have left after taxes, essential expenses (like housing, food, and healthcare), and debt payments. This method recognizes that a high income doesn’t necessarily equate to a middle-class lifestyle if a large portion of that income goes towards debt repayment, such as student loans, credit cards, or a mortgage. By this measure, someone could earn a relatively high gross income but still not have the disposable income typically associated with a middle-class lifestyle.
| Perspective | Criteria and Definition |
|---|---|
| Economic Percentile | -Top 20% Income Earners Are Considered Upper Class or Rich -Bottom 20% Income Earners Are Considered Poor -The Middle 60% Constitutes the Middle Class. |
| Median Income | -Annual Income in the U.S. In 2022 Was $64,240 -Middle-Class Range Is Approximately $40,000 to $80,000 per Year by Considering $20,000 on either Side |
| Cost of Living Adjusted Income | -Adjusts Income Based on the Cost of Living in Different Areas |
| Disposable Income and Debt Levels | -Focuses on disposable income after taxes, essential expenses, and debt payments |
Income Ranges and Tax Policies
The income range provides another lens through which to view middle-class status. A general consensus among economists suggests that an annual income between $25,000 and $100,000 falls within the middle-class category.
However, this range is broad and can be misleading, necessitating a more nuanced approach that considers regional cost of living and lifestyle choices.
Tax policies further complicate this picture, with varying income cutoffs for different tax brackets. For instance, certain tax discussions set the middle-class income ceiling at $250,000, while others extend it to $400,000.
The Alternative Minimum Tax, initially targeting high-income earners, now affects middle-class families due to its lack of adjustment for inflation, blurring the lines of income categorization.
The Subdivisions of Middle-Class and Regional Influences
The middle class itself can be subdivided to provide a clearer picture. The term ‘upper middle class’ often describes those earning between $100,000 and $250,000 annually.
While this group enjoys financial comfort, they might not perceive themselves as ‘rich,’ emphasizing the relativity of financial status. Location plays a crucial role in this perception.
An income considered affluent in a semi-rural area may barely cover basic necessities in urban centers like New York City, illustrating the vast disparities in cost of living and lifestyle across regions.
Middle-Class Classification
| Income Level | Description | Income Range | Factors to Consider |
|---|---|---|---|
| Lower Class | Bottom 20% of income earners | Varies by region | Economic Percentile |
| Middle Class | Middle 60% of income earners | Generally $25,000 – $100,000 | Economic Percentile, Median Income, Tax Policies |
| Upper Middle Class | Higher income within the middle-class bracket | $100,000 – $250,000 | Income Range, Perception, Regional Variations |
| Upper Class | Top 20% of income earners | Varies by region | Economic Percentile |
Another Take
Self-identification and perception are integral to understanding middle-class status. Middle-class values and aspirations often passed down from previous generations, play a significant role in how individuals perceive their financial standing.
The feeling of being ‘middle class’ is influenced by one’s surrounding community and peer group, with relative wealth playing a critical role in this self-assessment. Others subdivide what’s considered middle class to provide a more nuanced picture.
Many of those who make less than $75,000 a year consider someone who makes more than $100,000 a year “rich” — and definitely outside the middle class.
However, if you make $150,000 a year, you might not feel “rich.” Instead, you might still feel part of the average American middle class.
As a result, the term “upper middle class” is often used to describe those who make between $100,000 and $250,000 a year.
Pinpointing what constitutes a middle class income is further complicated by the fact that location plays a role in your spending power.
With my income, I’m considered fairly well-off in my relatively small semi-rural community. There’s a low cost of living, and my money goes further.
However, if I were to move to a larger city, like Seattle, my money wouldn’t go as far. And if I moved to a place like New York City, I’d almost be poor.
In many ways, “rich,” “poor,” and “middle class” are relative. Additionally, there is a strong psychological element.
Pinpointing whether or not you actually have a middle-class income involves the complex interaction between what you actually make, and how you feel about what you make.
What do you think? What constitutes the middle class? Do you consider yourself middle class?
Conclusion
Middle-class income is a multifaceted concept, influenced by economic percentiles, absolute income ranges, regional cost of living, tax policies, and individual perception.
A comprehensive understanding of this socioeconomic status requires acknowledging these diverse factors and recognizing their interconnectedness.
As society evolves, so does the definition of middle class, making it imperative to continually reassess and understand this critical segment of the population.
very informative for someone who doesn’t understand all that tax stuff. E’re having it done professionally.
Are you talking about gross income (before tax) or net income (after tax) for this analysis?
Hi Vaz – Gross. Net has too many variables, and depends on the individuals tax situation.
Great article! Took many areas into consideration, which allowed a bigger picture than just the number portion.
*not boasting
I have very little debt, house ,cars, etc . Are all paid for (student debt/loans). I live in a good area, have a good income (above $35000 but below $55000, a year), raising 3 kids on my own (no assistance) and it’s a struggle more often than not. So the numbers are off in my opinion, sorry.
What about a middle class range for retired persons. After all we are not forced to provide for children, most of our major purchases are done, aren’t faced with college expenses, etc. Only thing expensive on our horizon is health care. Can anyone come up with a formula for us?
Hi Gordon – No one precisely how to measure middle class. It’s really subjective. For the most part, you’re middle class if you think you are!!! But really, if you are comfortable with your income, have some savings, live in an acceptable neighborhood, and have the basic trappings of middle class life, you’re middle class. I’ve seen dozens of formulas trying to pin down what it is, and they’re most a best guess.
$100,000 only makes up 21% of households in US
$250,000 only makes up 1.5% of households in US
If you make over $100,000 you are definately not middle class, the median income in US is $53,500 so if you are doubling up on that how on earth can you think you are middle class and if you make 5 times as much and are in the top 2% you are rich.
$100k is nowhere near the top 20% and $250k is not the top 1% the top 1% is in reality $200 million and up. millionaires are barely out of the middle class.
Hi “Bruce” – You’re right about $100k being nowhere near the top 20%. According to this article, it’s actually in the top 10%! OK, more like $105k, but close enough. That would definitely qualify as upper middle class, though in large metro areas that would be a stretch.
Is 50K taxable income middle class. If so, how come I must make $1500.00 in order to put $1000.00 into savings?
It’s definitely true that here nearly everyone thinks of themselves as “middle class” despite massive financial disparities. Which of course is why politicians use the term so frequently. Poverty level folks on up to the very rich consider themselves middle class. Even though within that range the top looks down on the bottom as “poor” and the bottom looks at the top as “rich”. In many ways, the term “middle class” has lots its meaning.
$25,000 – $100,000 a year a middle class? Quite surprising. If this is the benchmark, then I can say that I am so poor as I don’t even make $10,000 a year. But I know, it all depends on your location.
I think the last part was spot on, where we live has everything to do with how far our income goes. I took a huge pay cut to move from DC to the midwest, yet I feel like my money does so much more here.
I agree that it is all relative. $100K in Louisiana is very different from $100K in NYC. To me, it is also about the quality of life and the opportunity cost of earning an income.
I think you would find G.B. Shaw’s “Pygmalion” very interesting – wonderful play about the same topic you are addressing.
We are middle class due to our income, but I don’t want to behave like most middle class families who are keeping up with the Joneses.
If middle class is more of a mindset (beside the numbers) is upper class a mindset too? I grew up in an upper class environment with prep school, neighborhood and very successful people. My parents did well and I tended to emulate my environment. Although I do not earn a great deal of money anymore, my values are still upper class.