This phrase is found in Romans 3:23 (“for all have sinned and fall short of the glory of God”) and in the last clause of Romans 5:12 (“… because all sinned”). Basically, the phrase means that we’re all lawbreakers, because sin is the violation of God’s law (1 John 3:4). Sinfulness is the general characteristic of all mankind; we are all guilty before God. We are sinners by nature and by our own acts of transgression.
In Romans 5:12 the point of “all sinned” seems to be that all humanity “participated” in Adam’s sin and were condemned to death even before they themselves deliberately chose to sin; in fact, that is exactly what Paul confirms in Romans 5:14. Within this passage (5:12–21), Paul explains how and why the “death sentence” for Adam’s sin has come upon the entire human race.
Augustine explained Adam’s transmission of his sin to us with a theory known as “federal headship,” a view held by most evangelical scholars. Augustine taught the concept of “inherited guilt,” that we all sinned “in Adam”: when Adam “voted” for sin, he acted as our representative. His sin was thus imputed or credited to the entire human race—we were all declared “guilty” for Adam’s one sin.
Another view is that the phrase “all have sinned” refers only to personal sin arising from our sin nature. After clarifying in 5:13–17 how personal sin is imputed and then spreads, Paul explains why “all die,” even if they have not committed personal sin. The reason all receive this “death sentence” (5:18a) is that, through Adam’s disobedience, all were “made sinful” (5:19a). The verb made means “constituted”; thus, the sin nature is an inherited condition that incurs a death sentence, even in those who are not yet guilty of personal sin (5:13–14). This inherited condition inevitably spawns personal sin when conscience matures and holds a person accountable as soon as he chooses to knowingly transgress the law (2:14–15; 3:20; 5:20a).
We are all sinners because Adam passed on his sinful condition that leads inevitably to our personal sin and death. All share Adam’s death sentence as an inherited condition (the “sin nature”) that is passed down to and through the human race and that every child brings into the world. Even before a child can be held accountable for personal sin, he or she is naturally prone to disobey, to tell lies, etc. Every child is born with a sin nature.
“The Lord looks down from heaven on the sons of men to see if there are any who understand, any who seek God” (Psalm 14:2). And what does the all-seeing God find? “All have turned aside, they have together become corrupt; there is no one who does good, not even one” (verse 3). In other words, all have sinned.
 Got Questions Ministries. (2010). Got Questions? Bible Questions Answered. Bellingham, WA: Logos Bible Software.