Does The President Have To Pay Taxes While In Office?

According to a pay trends survey conducted by Willis Towers Watson in 2022, the average annual pay increase for U.S. workers has hovered around 3% in recent years. However, that doesn't hold true for the president of the United States — a person that some consider to be the de facto leader of the entire free world. The U.S. president's salary has been stuck at $400,000 per year since 2001, shortly before George W. Bush took office. Still, that's a pretty respectable compensation that we can bet many readers would be more than willing to accept.

Besides a generous salary, the president also receives a $100,000 annual travel account, a $50,000 expense account, and $19,000 for entertainment. Then, there's the free residence, personal chef, and housekeepers. Finally, like many government employees, the highest office in the land also comes with the perk of a retirement pension.

If you're wondering if the president has to pay federal taxes on that $400,000 annual income, they certainly do, though it's worth noting only the income portion is taxable, not any of the other perks like the travel budget. Also worth mentioning is that a $400,000 salary isn't even enough to put the president into the highest federal tax bracket nowadays. Instead, that income falls into the second-highest bracket, which carries a marginal tax rate of 35%. To qualify for the top-dog 37% bracket, presidents would need to report a taxable income of $609,351 or more.

Just like any other taxpayer, the president of the United States is eligible to receive a tax refund if they paid too much income tax over the course of the fiscal year. Such a scenario could play out if the president has too much taxes withheld from each paycheck — which are distributed monthly — due to incorrect reporting of their personal details, such as marital status and number of dependents. Similarly, the president can also wind up owing federal taxes if not enough money was withheld from their paychecks due to erroneous information or a failure to factor in other forms of income.

Further, a sitting U.S. president's tax obligation will also depend on other assets, investments, and income streams held before and/or during ascending to office, not just the presidential salary. That could, for example, include long- or short-term capital gains tax on the sale of assets, plus income from things like dividends, interest payments received, or rental income.

It's interesting to note that many U.S. politicians, including presidents, put their investments into a blind trust to avoid conflicts of interest while governing. Peter Overby of NPR explains that a blind trust is "... a legal arrangement sometimes used by elected officials to avoid potential conflicts. An independent trustee takes over an official's investment portfolio; the official cannot direct or advise the trustee on investment decisions."

[Featured image by Pete Souza via Wikimedia Commons | Cropped and scaled | Public domain]

Most modern U.S. presidents have shared their tax returns with the public, although there's no legal obligation to do so. The income tax system as we know it was established with the 16th Amendment in 1913. However, presidents didn't typically disclose their tax returns for the first several decades under the modern tax system.

That all changed under President Richard Nixon in 1973, amongst allegations he reduced his tax liability using questionable tactics. In defense against those accusations, Nixon shared his tax returns dating from when he took office in 1969, and in a speech before 400 Associated Press managing editors famously said, "I'm not a crook."

More recently, President Donald Trump refused to share his tax returns, citing that he was being audited as the reason. However, The New York Times later released what it claimed was 20 years' worth of Trump tax documents. In typical fashion, the former businessman and star of the reality television series "The Apprentice" denounced the leaked tax returns as "totally fake news."