A new analysis by The Century Foundation and Protect Borrowers reveals that debt obligations are absorbing a substantial share of income gains across American households. The research tracked millions of working-age Americans between ages 25 and 64, examining credit records alongside Census Bureau income data covering credit cards, auto loans, student loans, and home equity lines of credit.
The findings indicate that real take-home monthly pay for a typical household increased by $109 from late 2022 to early 2026, adjusted for inflation. During the same period, monthly debt payments rose by $57. For single-earner households, researchers estimate that 52 cents of every dollar gained in real income now goes toward higher debt payments. For dual-earner households, the entire income gain and additional funds are directed toward debt obligations.
Inflation-adjusted debt payments increased nearly 15 percent over the roughly three-year period, substantially outpacing household income growth of less than 2 percent. Angela Hanks, chief of policy programs at The Century Foundation, suggested the findings may understate actual financial pressures, noting that including mortgage payments and installment loans outside standard credit files would reveal even higher debt burdens.
Separate Federal Reserve data corroborates the mounting strain on household finances. The Fed’s Survey of Consumer Finances found that 8.6 percent of families spent more than 40 percent of their income on debt payments in 2025, compared to 6.5 percent in 2022, reaching levels not observed since 2013. Financial experts emphasize that while some debt may facilitate wealth building, extended repayment terms and larger obligations can become burdensome, particularly when combined with limited emergency savings.
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