Ethernet is fast but wi-fi is slow?

I have noticed that when using wi-fi my internet slows down a good amount. When I plug an ethernet cable into my router, my download speed is about 25 mbps and upload is 26 mbps.

However, when I plug out the ethernet and connect to my wi-fi (while sitting right next to the router) my speed drops to about 15 mbps down, 18 mbps up. This gets worse as I get further away from the router. For example, if I go upstairs my down goes down as low as 4-5 mbps. What could be causing this? Is my router bad? I have verizon fios by the way.

This is to be expected. Here's why.

In order to communicate computers need to send very long and detailed messages that carry not only the data that you're trying to send but meta-data as well (data about the data). These messages are communicated as binary pulses that are transferred by various mediums. In the case of an ethernet cable, electricity is used. With WiFi it's light! (I'm using the scientific definition of light here, electromagnetic radiation. In this case, radio waves.)

If these messages are corrupted during transit by even one pulse they can't be used. Your router has ways of detecting, and even fixing some of, these losses. As you get physically further away from the router more signal corruption will occur. Your machine will have to re-send packets until they get through correctly. This is what makes a stronger signal better than a weak one. Better routers are better at making the needed corrections, or even have more powerful transceivers and this and will make them perform faster.

If you have a compatible router and the needed skill you could try dd-wrt, the open-source router firmware. With it installed you can change settings that will improve your router's performance, but you could break it if you're not careful. Proceed with caution.

Your overall network speed is limited by many factors including how many people are on your ISP's network in your area (local WAN), the type of physical cable that connects your WAN, the quality of all the routers along the route, any bandwidth limits set by the ISP, to name only a few.

The main issue in populated areas is that there are too many routers sending WLAN signals, which leads to Wi-Fi interception, especially if you're using 2.4GHz signal(wider scope and more crowded than 5GHz).

Most routers auto-change the channel they are transmitting data through, and changing the channel manually isn't a solution.

The best remedy is to switch to 5GHz which is more capable and doesn't intercept other signals as much as 2.4GHz