This past March, in advance of the April 15 deadline to file state and federal income taxes, Gallup asked voters how they feel about the U.S. tax code as it is currently written.
The polling organization found a majority of voters, 59 percent, think the amount they pay in federal income taxes is too high. A little more than one-third, 38 percent, said the amount they pay is “about right,” while only two percent said they believe they should pay more. The answer to that question diverged along party lines. Specifically, 71 percent of Republicans and 63 percent of Independents said their federal tax burden is too high; only 39 percent of Democrats said the same.
Enter the House GOP’s “big, beautiful tax bill,” which was released Monday. The draft, marked up by the Ways and Means Committee yesterday (and overnight!) and advanced to the next legislative step on a party-line 26 to 19 vote early this morning, plays into the prevailing view that most Americans have: they would not mind seeing their own federal tax burden lowered.
Let’s take a look at what Republicans have proposed and who would benefit most from the GOP tax bill.
What’s in the Republicans’ Tax Bill?
In 2017, during President Donald Trump’s first term in office, the Republican-controlled Congress approved the Tax Cuts and Jobs Act (TCJA), a reduction and reform bill that lowered levies for individual taxpayers, families, small businesses, and corporations.
To keep the cost of that legislation in check, GOP lawmakers built expiration dates into that legislation for some of the largest tax reductions. Cuts in individual income tax rates are set to expire, for example, as is a deduction for pass-through businesses — LLCs, S Corporations, and other types of businesses — that pay individual tax rates instead of the corporate tax rate.
These tax cuts, along with a host of others, expire at the end of 2025. The corporate tax rate enacted into law in 2017 does not have an expiration date..
Flash forward to the Ways and Means Committee markup: to avoid a massive tax increase on American families and small businesses, the GOP’s new tax bill aims to extend many of the expiring TCJA provisions. It also introduces a few new policies that Republicans hope will help working families and middle-class voters. Together, these provisions would reduce taxes by more than $4 trillion over the next 10 years.
The most important, and costliest, parts of the bill include:
- Creation of a new type of tax-preferred savings account, a “MAGA Account,” for children under the age of eight and born between 2025 and 2028, to which the federal government would contribute $1,000 and families could contribute $5,000 annually for eligible children to receive when they turn 18;
- Making the Section 199A pass-through deduction for S-corporations, LLCs, sole proprietorships, and partnerships permanent and raising that deduction from 20 percent to 23 percent starting in 2026;
- Making permanent the individual income tax rate cuts that were included in the TCJA — tax rates would remain at 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and 37 percent;
- An increase in the standard deduction for individuals to $16,300 for single filers and $32,600 for married filers;
- A temporary increase in the child tax credit deduction from $2,000 to $2,500 a year;
- An increase in the state and local tax (SALT) deduction cap from $10,000 to $30,000 for individuals who earn up to $200,000 per year and married couples who earn up to $400,000 per year;
- Eliminating taxes on estates valued at up to $15 million (estates valued at nearly $14 million are exempt now);
- Temporary elimination of taxes on tips and overtime pay (this policy is a new one proposed by President Trump on the campaign trail);
- A $4,000 standard deduction bonus for senior citizens. (This idea replaces President Trump’s previously proposed plan to exempt Social Security benefits from taxation.)
In the run-up to the release of the bill, some Republicans had proposed capping the amount of state and local taxes corporations could deduct. The Ways and Means Committee left that proposal out of their draft. The bill also does not include a new, higher individual income tax bracket for millionaires — President Trump had floated that idea — and it would preserve current tax treatment for carried interest.
To pay for the tax cuts, the bill approved by the committee this morning calls for at least $1.5 trillion in spending reductions and some tax increases. The tax hikes would hit endowments at elite universities such as Harvard and Yale and private charitable foundations. Republicans also would sunset Biden administration tax credits for electric vehicles, home energy efficiency, and clean hydrogen production.
How Will the GOP Tax Bill Affect “People Like Me?”
As noted above, the Gallup poll indicated that most voters think their own tax burdens are too high. In other words, they are likely to want taxes lowered for people like them.
When asked about what should happen to other taxpayers’ levies, the numbers plummet.
Only 15 percent of Republicans, 14 percent of Independents, and three percent of Democrats think wealthy Americans pay too much to the federal government, for example. Only 15 percent of Republicans, six percent of Independents, and one percent — one percent! — of Democrats think corporations pay too much. (Again, because the 2017 TCJA corporate tax cut is permanent, the GOP’s tax bill does nothing to that levy, though some Republican lawmakers have suggested the rate be lowered even further.)
House Ways and Means Committee Chairman Jason Smith (R-Mo.) suggested his committee’s bill would reduce burdens on working Americans while making well-off Americans and corporations pay more. “Under the economic policies of President Biden and Washington Democrats, the wealthy and well-connected benefited from taxpayer handouts,” he argued in a press release. “The Ways and Means Republican tax bill ends special interest giveaways and will hold the woke elite and entities that benefit from the tax code accountable. It will halt the flow of taxpayer dollars to illegal immigrants and China.”
How accurate is this statement?
According to the Tax Policy Center, while the GOP’s legislation reduces taxes for most taxpayers, for households subsisting on middle- and low-incomes, the bill will have less of an impact. Specifically, TPC found “the lowest-income households would see an average tax cut of about $120, or 0.6 percent of their after-tax income. Middle-income households would see their taxes fall by about 1.7 percent of their after-tax income, or about $1,300 on average. In contrast, the top one percent would get an average tax cut of more than $100,000, or nearly five percent of their after-tax income.”
Additionally, only about one-third of low-income households would see a federal tax cut in 2026. Meanwhile, nearly 90 percent of middle-income households and more than 98 percent of the top one percent of households would. Some households, about six percent, actually would see their federal tax burden go up, including 10 percent of households with incomes between $100,000 and $200,000.
Democrats proposed several amendments to the bill yesterday and overnight that aimed to rein in the Trump administration and alter the GOP’s tax proposals. These policies included eliminating the president’s emergency tariff powers, reinstating Affordable Care Act subsidies that are set to expire and that will result in more than four million Americans being kicked off of federal health insurance programs, and increasing the SALT cap to $80,000.
The committee rejected each of these amendments, and more.
What Is the Next Step for the House Tax Bill?
While a cause for celebration for Republicans, today’s vote is hardly the last, or even most difficult step, for the GOP’s tax reduction bill. Indeed, as The Hill noted this morning, “the road ahead still is rocky.”
“House Republicans are still at odds over the state and local tax (SALT) deduction cap, which has emerged as one of the biggest — and most complicated — hangups dogging the party’s mega bill,” The Hill said.
Still, the legislation can now at least advance to the House Budget Committee, which is tasked with combining all the portions of the fiscal year 2026 budget reconciliation bill from other committees of jurisdiction into one package that, if approved by the Budget Committee, will advance to the full House chamber. That final package, as we noted last week, is likely to include large cuts to Medicaid. A separate story from The Hill this morning reported that a growing number of GOP senators have voiced opposition to those cuts.
When asked about ongoing negotiations regarding the budget reconciliation, Sen. Lisa Murkowski said, “Everything’s a moving target until it stops.”
What was approved this morning, therefore, is not written in stone. It still must pass the full House, and then the Senate will likely seek to amend it.