How much would Americans of different income save in taxes if the GOP bill is signed into law?

CBS News

16-05-2025

The White House on Friday touted a Republican-backed tax bill as delivering "PERMANENT tax cuts and bigger paychecks." Yet experts say the legislation would disproportionately benefit the highest income earners, while offering far more modest gains to Americans lower down the ladder.
If the bill is passed, households with more than $1 million in annual income would see their after-tax earnings rise by 4.3%, according to a new analysis from the Center on Budget and Policy Priorities (CBPP), a public policy think tank. The lowest-earning 20% of Americans would receive the smallest boost — their after-tax incomes would rise 0.6%, or an average of $90 annually, CBPP found.
Other analyses have reached similar conclusions. The Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution, forecasts that the bottom 20% of Americans would see a 0.6% increase in after-tax income under the House tax bill, compared with a 3.7% increase for the top 20%.
The fate of the GOP tax bill is unclear after five Republican members of the House Budget Committee on Friday voted against advancing the measure, dubbed the "one big, beautiful, bill," saying the legislation does not do enough to slash federal spending.
Such projections don't include the impact of cuts to federal programs such as Medicaid and food stamps, which support many low- and middle-income households. Under the GOP bill, those services could face steep cuts, potentially bumping millions off Medicaid by adding work requirements and cutting federal funding provided to states to support the health care program.
Those cuts could leave many low-income households worse off even after accounting for lower taxes, according to another analysis released Friday from the Penn Wharton Budget Model, a University of Pennsylvania research group that analyzes the fiscal impact of public policies.
The bottom 20% of households, who earn up to about $17,000 annually, would see their after-tax incomes drop by $1,035 in 2026, including a reduction in government benefits, the nonpartisan group found. The top 0.1%, who earn at least $4.3 million per year, would get an annual after-tax boost of about $389,000, Penn Wharton said.
The White House took issue with the CBPP and Penn Wharton analyses.
"Once again, the experts are wrong, just as they were about the impact of Trump's tariffs, which have yielded trillions in investments, record job growth, and no inflation," said White House spokesman Harrison Fields in an email to CBS MoneyWatch.
He added, "These experts should be embarrassed to share their 'expertise,' considering the egg still on their faces. MAGAnomics transcends conventional wisdom, and the President's One, Big, Beautiful Bill will continue to prove the haters wrong."
The White House pointed to an analysis from the Joint Committee on Taxation that estimated the average tax bill would decline 11.1% in 2027 under the GOP legislation. The nonpartisan panel, which assess the impact of legislation for Congress, found that the biggest tax decrease would go to people earning $15,000 to $30,000, with a decline of 21.1%, while those earning more than $1 million would decline 8.6%
Tariff impact
Because low-income households spend a bigger share of their income on basics like food and clothing than wealthier Americans, they are likely to take a bigger financial hit from tariffs, experts including the nonpartisan Yale Budget Lab have said. That could effectively wipe out the benefits from the tax cuts, according to some analysts.
If inflation rises as a result of higher tariffs and tax cuts, the bottom 20% of U.S. households would lose $100 per year, largely due to paying higher costs for consumer goods that are imported from other countries, the CBPP found. Because tariffs are taxes on imports paid by U.S. businesses, they typically pass on the cost of such duties to consumers by raising prices.
"If we add just the effects of the tariffs the Trump Administration has put in place, the plan would still boost the rich while leaving the lowest-income people worse off because their tax cuts are so small," Brendan Duke, senior director for federal fiscal policy at the CBPP, said in a post.
Counting the impact of tariffs, the top 1% of households would still see their after-tax incomes increase by 3%, or almost $45,000, the think tank estimated. That analysis doesn't include the impact of cuts to services like Medicaid or food stamps.
On Thursday, Walmart said it plans to hike prices this month to offset the cost of new tariffs introduced by the Trump administration.
Extending the 2017 tax cuts
As well as calling for deeper cuts in federal spending, the Republican lawmakers blocking the tax bill also want to move up work requirements for some Medicaid recipients, which under the current bill wouldn't kick in until 2029.
Other Republicans want a bigger deduction cap on state and local taxes, known as SALT, that can be applied on people's federal tax returns. The bill increases the cap on the deduction from $10,000 to $30,000.
But the bill's basic outline for cutting taxes isn't a focus of debate among Republicans, who are seeking to extend Mr. Trump's 2017 Tax Cuts and Jobs Act. The bill would also add a host of other cuts, such as eliminating taxes on workers' overtime pay and tips, while also providing a more generous standard deduction.