A new report from the nonpartisan Joint Committee on Taxation shows that middle-income Americans would see lower federal tax bills under the latest Republican-backed tax proposal, despite rising concerns over inflation.
The committee’s analysis, released May 13, breaks down the projected effects of the “Make American Families and Workers Thrive Again Act,” a Trump-endorsed plan that extends key provisions of the 2017 tax law while adding new breaks for workers and families.
Average taxpayers would pay 6% to 8% less
By 2027, households earning between $50,000 and $100,000 would see their federal tax burdens fall by roughly 8%, according to the report. That includes:
- $50,000–$60,000 earners: Tax cut of 7.9%
- $60,000–$80,000 earners: Tax cut of 8.3%
- $80,000–$100,000 earners: Tax cut of 8.2%
These income groups represent the bulk of America’s working and middle class. Their average effective tax rates would drop from roughly 13%–15% to 12%–14%, even as inflation continues to raise costs for housing, food, and transportation.
Relief includes child tax credit boost, tip and overtime exclusions
The legislation includes several targeted tax breaks aimed at easing the pressure on households hit hardest by inflation. Among them:
- Expansion of the child tax credit to more families
- Temporary elimination of income tax on tips and overtime pay
- New deductions for seniors and family leave
- Extended standard deduction enhancements first introduced in 2017
The proposed changes are structured to phase out after 2028 unless made permanent by future legislation.
High earners benefit too — but by smaller margins
While every income bracket sees a tax cut under the plan, the reductions are proportionally smaller for the wealthiest Americans. For example:
- Earners in the $1 million+ range would see a 6.4% tax cut
- Those making $200,000–$500,000 would see about an 8.5% reduction
These taxpayers still pay the largest share of total federal taxes. By 2027, households earning over $200,000 would contribute over 52% of all federal tax revenue.
Democrats say the plan rewards the wealthy
While the numbers show broad tax cuts, critics argue the plan favors higher earners and corporations. Some of the bill’s provisions phase out popular clean energy incentives and curb deductions for state and local taxes, which are widely used in high-cost states like New York and California.
Supporters argue the proposal is designed to simplify taxes and reward work without raising deficits, claiming it will help households facing rising costs.
What’s next?
The proposal, which aligns closely with Donald Trump’s economic agenda for 2025, is expected to be a central issue in the 2026 midterm elections. Democrats are likely to push alternative plans focused on targeted relief and corporate tax hikes.
The full report is available through the Joint Committee on Taxation.
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