NEW YORK (CNNMoney.com) – A lot of people will tell you they think their taxes are too high.

But when it comes to federal income taxes, there is a growing number of tax filers who end up with no tax liability after taking all the credits and deductions to which they're entitled, according to the Tax Foundation, a nonprofit policy research group that advocates for tax simplification.

Live the same, pay more You might earn more in big cities...but federal income taxes don't take into account cost of living. Metro Area  Income for median standard of living  Tax liability  Effective tax rate  Milwaukee (National Average)  $74,443  $8,081  10.9%  Orange County, CA  $100,079  $14,506  14.5%  San Francisco  $135,003  $23,250  17.2%  New York City  $162,974  $31,139  19.1%     Source:  Tax Foundation calculations based on ACCRA data.

Using data from the IRS and estimates from the Congressional Budget Office, the Tax Foundation estimates that nearly 42.5 million filers (about 32 percent of all filers) paid a net of $0 to the IRS in 2004. That's up about 50 percent from the number of non-payers in 2000.

Thanks in part to an increase in the child tax credit from $500 to $1,000 and the introduction of the new 10 percent tax bracket, more lower-income and middle-income tax filers find themselves owing nothing to Uncle Sam, said Tax Foundation executive director Scott Hodge.

Those measures -- put into place since 2001 -- were targeted in part to help the middle class, Hodge said. But middle class doesn't necessarily correspond with middle income.

The stereotypical notion of middle class, he noted, is a married couple with kids. But his analysis shows that a majority of middle-income filers (57 percent) are now single, and married couples make up the majority of filers in the top 20 percent of taxpayers (i.e., those with AGIs over $71,028).

That top group is not hard to join when you have dual-income couples – who are typical in today's middle class -- especially if they live in expensive areas where salaries are nominally high but can only purchase a middle-class lifestyle.

As a result taxpayers in those high-cost areas pay more in federal income tax than their otherwise identical counterparts elsewhere in the country because the federal income tax code is not adjusted for cost-of-living.

A dual-income couple without kids and an AGI of $74,443 in Milwaukee can afford a median standard of living, according to the Tax Foundation report. That still puts the couple in the top 20 percent of taxpayers, giving them a tax liability of 8,081, or about 10.9 percent of their AGI (otherwise known as their effective tax rate).

To afford the same standard of living in Orange County, California, the couple would need an AGI of $100,079, putting them in the top 10 percent of taxpayers with a tax liability of $14,506. That represents 14.5 percent of their AGI.

And if they move to New York City, they'd need an AGI of $162,974, putting them in the top 3 percent of taxpayers and giving them a tax bill of $31,139, or 19.1 percent of their AGI.

The threat of the alternative minimum tax (AMT) can make matters even more expensive for dual-income families.

That's because income exemption levels for the AMT -- a higher tax originally designed to insure the rich pay their fair share – are not adjusted for inflation. And since the tax disallows a number of the credits and deductions that help tame a middle class family's tax liability under the regular tax code, every salary increase can put a dual-income couple at greater risk of having to pay the AMT.

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