Speaker of the Home Mike Johnson, R-La., speaks to reporters as he walks again to his workplace because the Home of Representatives waits to vote on President Trump’s “large lovely invoice” reconciliation bundle on July 3, 2025.
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A large bundle of tax cuts President Trump signed into regulation on Friday could be a windfall for the wealthiest U.S. households. However the measurement of that monetary profit relies upon largely on the place high-income taxpayers stay, in line with a brand new evaluation by the Institute on Taxation and Financial Coverage.
The laws would give the highest 1% of U.S. households a mean tax minimize of about $66,000, or about 2.4% of their earnings, in 2026, in line with ITEP, a left-leaning suppose tank. (These households have incomes of $917,000 or extra per 12 months, averaging about $2.7 million, it stated.)
Some households stand to get a a lot larger tax profit.
The wealthiest households in three states — Wyoming, South Dakota and Texas — would see their annual tax payments fall by greater than $100,000, ITEP discovered.
In Wyoming, the highest 1% would see their taxes fall most: by a mean of about $133,000 (or 3% of earnings) in 2026, it stated. The typical earnings of the highest 1% within the state is about $4.5 million.
“The invoice is most advantageous to conservative-leaning states which have loads of very rich individuals residing inside their borders,” stated Carl Davis, ITEP’s analysis director.
These states additionally do not levy private earnings taxes, he stated.
Wyoming and Texas “are traditional examples of states with loads of rich individuals and which tax these rich individuals extremely frivolously,” Davis stated.
Why the rich get a big tax minimize
Senate Republicans handed the laws, initially referred to as the One Large Lovely Invoice Act, on Tuesday with the slimmest of margins. Home Republicans handed the invoice on Thursday, and despatched it to the president for his signature.
The laws gives greater than $4 trillion of internet tax cuts over a decade, with most advantages accruing to higher-income households, analyses have discovered. It additionally slashes the social security internet, reducing billions of {dollars} from packages like Medicaid and meals stamps meant to assist decrease earners.
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The centerpiece of the invoice is an extension of 2017 tax cuts enacted throughout President Trump’s first time period in workplace.
Total, the laws lowers earnings tax charges, exempts a bigger share of rich estates from taxation and gives tax breaks to enterprise house owners. These are among the many core methods the GOP invoice advantages high-income households, Davis stated.
It additionally caps the quantity of state and native earnings taxes and property taxes that households can deduct from their taxable earnings every year, at $40,000.
That “SALT” coverage would not negatively influence rich residents in states like Wyoming, South Dakota and Texas, the place residents do not owe state earnings tax, Davis stated. However it has a big influence on states with excessive state and native earnings taxes and property taxes.
In different phrases, high-income residents of Wyoming, South Dakota and Texas usually get many of the tax upside and never a lot draw back, he stated.
Conversely, the best earners in California and New Jersey would see a smaller tax minimize in 2026, averaging about $34,000 and $21,000, respectively, ITEP discovered. That represents about 1% of their earnings in every state.
Separate analyses have discovered that the wealthiest households will reap the biggest monetary advantages from the GOP invoice.
The highest 20% of U.S. households (incomes greater than $217,000 a 12 months) would get a tax minimize equal to three.4% of their after-tax earnings in 2026, in line with the Tax Coverage Middle. In the meantime, the underside 20% would get a 0.8% tax minimize.
Its evaluation solely examined the tax parts of the laws.
Total, extra complete analyses that additionally account for cuts to packages like Medicaid and the Supplemental Vitamin Help Program, the bottom earners could be worse off, in line with analyses by the Price range Lab at Yale College and the Congressional Price range Workplace, which modeled comparable laws handed by the Home final month.
