MW What's in the GOP tax bill? An $815 tax cut for middle-class households - and $44,000 for millionaires

Andrew Keshner

Households in the top 0.1% would reap more than $390,000 in tax savings, according to one analysis of the tax and spending bill that's now headed to the Senate for a vote

It's a tale of two tax cuts - and the differences can be stark.

A growing stack of studies show most Americans will be getting tax cuts under the massive tax and spending bill that passed the U.S. House of Representatives by a single vote Thursday.

Republicans are touting their megabill as a win for working- and middle-class households, and research released this week shows there are millions of households poised for a tax cut.

That's part of the story.

The same batch of research shows the biggest windfalls in the House version of the bill would go to America's richest households, as measured by the money they would be saving on taxes and the share of their income that would avoid taxation.

The bill would maintain the 2017 Trump tax cuts, add new tax breaks and soup up existing ones.

What Republicans are calling President Donald Trump's "big, beautiful bill" has new features aimed at the lower and middle rungs of the income ladder, such as a $4,000 "senior bonus" for taxpayers 65 and older with income less than $75,000 for an individual or $150,000 for a married couple. The deduction's value phases out above that threshold. Deductions for overtime pay and tipped income, meanwhile, apply to people making less than $160,000 this year.

The median U.S. income in 2024 was just over $80,000, according to the Census Bureau.

"This bill represents an historic opportunity to deliver economic freedom for working families, farmers and small businesses," said Missouri Rep. Jason Smith, the Republican who chairs the House Ways and Means Committee. "The House has acted. Now the Senate must do its part and send this bill to President Trump's desk."

Changes to the bill seem likely in the Senate.

A typical family with two children could see their take-home pay increase by more than $13,000 as a result of the bill's impacts on wages and taxes, according to the White House Council of Economic Advisors.

Democrats railed against the first round of Trump tax cuts in 2017, saying they were tilted toward the rich. Now they say that making those cuts permanent makes a bad situation worse, and that there will be losers, too - including millions of people who might lose Medicaid coverage to offset the costs of the tax cuts.

"Americans are asking for real relief: lower prices, affordable healthcare, support for their children and their families," said Rep. Richard Neal of Massachusetts, the Ways and Means Committee's ranking Democrat. "Instead, they're getting a textbook of broken promises that raises their costs and strips them of their basic needs - all to line the pockets of those at the top once again."

Who benefits in the 'big, beautiful bill'

The answers to who the winners are in the massive bill are complicated. Its tax cuts could add more than $3 trillion to the nation's deficit, according to the Penn Wharton Budget Model.

A household making $51,000 to $92,999 stands to gain an average $815 in after-tax income next year, according to numbers from the Penn Wharton Budget Model's researchers. That would amount to a 1.2% increase in their income.

Meanwhile, a household in the top 1% - with income between nearly $1 million and nearly $4.325 million - would get an additional $44,190 in after-tax income next year, the researchers said. That's a more than 2% increase in after-tax income.

Households in the top 0.1% sliver would reap more than $390,000 in after-tax income, a nearly 3% increase.

Meanwhile, the lowest-earning households would see their after-tax income shrink by $940 under the bill.

The Penn Wharton analysis doesn't factor in the bill's late-breaking increase of the state and local tax deduction to $40,000 from $30,000.

With that higher SALT deduction cap, "higher-income households would fare even better," said Kent Smetters, faculty director at the Penn Wharton Budget Model.

Numbers from the Tax Policy Center show the same pattern. More than nine in 10 households making between $50,000 and $100,000 would get an average tax cut between $1,260 and $2,060.

Meanwhile, more than eight in 10 households worth at least $1 million would get a tax cut of over $80,000. Around 60% of the tax benefits go to the top-fifth of households, according to the analysis.

An estimate from the nonpartisan Congressional Budget Office also showed a widening gap. The projected "household resources" of the country's bottom 10% of households by income would drop by 2% in 2027 and by 4% in 2033, mainly as a result of the bill's cuts to Medicaid and food stamps.

Household resources are a measure of money such as earnings after taxes, benefits and government assistance.

The top 10% of households would see their resources increase 4% in 2027 and 2% in 2033, the CBO analysis continued.

The analysis is "brutal," Jason Furman, a top economic adviser in the Obama administration, posted on X.

The Penn Wharton Budget Model considers possible Medicaid cuts, while the Tax Policy Center analysis does not.

Backstory on the projections

The 2017 Trump tax cuts will expire at the end of the year without congressional action. That would mean higher marginal tax rates, including a top rate of 39.6% instead of 37%. It would mean a lower estate tax and the end of a valuable business deduction. Around two-thirds of households would face higher taxes should the provisions of the Tax Cuts and Jobs Act expire.

The models from the Penn Wharton Budget and Tax Policy Center compare the tax savings of the new bill with what would happen if those 2017 tax cuts went away. In other words, the high-end tax-cut surge in the models mostly reflects a continuation of the current law.

It also factors in the anticipated effects of a business tax break that would become more valuable in the GOP plan and the indirect effects of a rule change that would let businesses write off all of a major purchase in the first year, said Kent Smetters, faculty director at the Penn Wharton Budget Model.

Rich taxpayers "are definitely winning more from this. At the same time, they pay more to begin with," said Smetters.

The top 10% of taxpayers paid over 70% of the nation's income-tax bill in 2022, according to the Tax Foundation, a right-leaning think tank.

Tax experts note the tax code is progressive, which has a very specific meaning: Income taxes exact progressively more income from wealthier households.

The Tax Policy Center's research showed the average federal tax rate keeps climbing for richer households - even after the new bill's impact. A millionaire household would face an average 30.4% rate, while a household earning between $50,000 and $100,000 would have a rate of between around 10% and 13%.

The debate on the tax bill "reveals an uncomfortable truth for both sides," said Jeffrey Hoopes, a professor of business at the University of North Carolina and the research director of the UNC Tax Center. "We have a very progressive tax system," he said, even if the latest bill could make it "slightly less progressive."

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-Andrew Keshner

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May 22, 2025 17:03 ET (21:03 GMT)

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