A Hypothesis Why U.S. Median Household Income Surged in 2025

Estimating median household income in the U.S. is normally a pretty boring affair. Since July 2025 however, we’ve seen a significant divergence in the available monthly estimates, which suggests something not-so-boring is taking place in that data.

One source of estimates is provided by Motio Research as part of the analytical firm’s Household Income Series. Motio Research’s estimates are developed from income data collected by the U.S. Census Bureau for its monthly Current Population Survey.

Political Calculations generates the other series of timely median household income estimates on a monthly basis. Our estimates are produced using aggregate wage and salary income data published by the Bureau of Economic Analysis and population estimates reported by the Census Bureau each month, which complements the survey-based estimates produced by Motio Research.

Normally, these two sets of estimates come in pretty close to each other, but that changed last year. Starting in July 2025, Motio Research’s survey-based estimates notably spiked up above our estimates. What’s more, they have maintained that difference through the end of 2025, even as our estimates have plodded along on a much more steady trajectory. This divergence suggests some factor is greatly affecting the survey-based income data, without affecting aggregate earned income data much at all.

There aren’t many factors that can have that kind of effect. One that might however points to the Trump administration’s efforts to deport the citizens of foreign countries who have been living and working in the United States without fully complying with U.S. laws throughout 2025.

One of the first things the administration did after President Trump was sworn into office on 20 January 2025 was to establish greater control over U.S. borders. That effort has greatly reduced the number of attempted unlawful border crossings. In the months that followed, the Trump administration expanded its efforts to get foreign nationals who unlawfully entered the U.S. or who have outstayed their visas prior to January 2025 to leave.

The administration claims it has successfully removed “nearly three million” such individuals. Over 625,000 of that claimed number is through the Department of Homeland Security’s highly visible deportation efforts, while most of the rest has been through “self-deportation”, which the Trump administration incentivized with an offer of free travel and a $1,000 cash bonus for foreign nationals to leave if they take the option. At the end of 2025, the administration even temporarily boosted the cash incentive to $3,000 to encourage more self-deportation before the end of the year.

We think these initiatives are affecting the survey-based income data. Assuming that most of those who are being deported or are choosing to self-deport are very low income-earners, their departure from the U.S. is very likely contributing to the apparent boost in median household income captured by Motio Research’s analysis. If the incomes of people at the lowest end of the income spectrum are no longer being captured in the survey because they have left the U.S., the median will skew higher in favor of the higher incomes earned by those who are still living and working in the U.S.

At the same time, there would be a small, downward effect on aggregate earned income resulting from the departure of those who had been earning very low incomes. Which is what we see in the data. The aggregate income data shows a slightly slower rate of growth during 2025 than in 2024, which would be consistent with that dynamic.

The following chart shows how Motio Research’s and Political Calculations’ median household income estimates compare over the four full years from December 2021 through December 2025.

The data suggests the combination of incentives introduced in May 2025 with increased resources for enforcement that were passed by the U.S. Congress in early July 2025 could explain why the two median household income series diverged from July 2025 onward with the patterns we’ve described.

But would that really affect the survey-based median household income estimates? The answer is yes, given the math behind how medians are calculated as this following video lesson from the Khan Academy demonstrates using a simple example involving golf scores:

Of the two DHS initiatives, the DHS’ incentive program for foreign nationals to voluntarily self-deport to receive free travel and a cash reward has been more successful in achieving its objectives. On 21 January 2026, the Trump administration boosted its cash incentive to $2,600 to encourage more such departures.

The standard disclaimer for this kind of analysis is that correlation isn’t causation, which is to say there may be factors beyond these contributing to what we observe in the data. Whatever those additional factors might be, they would not appear to be evident in the years preceding these initiatives, which means they would have to have become significant at the same time as the DHS’ initiatives. If the hypothesis the DHS’ initiatives are behind it doesn’t hold, what other factors would be capable of producing the observations we have for the divergence of median household income estimates in 2025?

Image credit: Department of Homeland Security. “Limited Time Offer“. Public domain image.