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 “huge stunning invoice” reconciliation bundle on July 3, 2025.
Invoice Clark | CQ-Roll Name, Inc. | Getty Photos
A massive package of tax cuts championed by President Trump and awaiting a final vote within the Home would be a windfall for the wealthiest U.S. households. However the dimension of that monetary profit relies upon largely on the place high-income taxpayers reside, in response to a brand new analysis 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 revenue, in 2026, in response to ITEP, a left-leaning assume tank. (These households have incomes of $917,000 or extra per 12 months, averaging about $2.7 million, it mentioned.)
Some households stand to get a a lot greater 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 revenue) in 2026, it mentioned. The common revenue of the highest 1% within the state is about $4.5 million.
“The invoice is most advantageous to conservative-leaning states which have quite a lot of very rich individuals dwelling inside their borders,” mentioned Carl Davis, ITEP’s analysis director.
These states additionally do not levy private revenue taxes, he mentioned.
Wyoming and Texas “are traditional examples of states with quite a lot of rich individuals and which tax these rich individuals extremely frivolously,” Davis mentioned.
Why the rich get a big tax minimize
Senate Republicans passed the legislation, initially known as the One Massive Lovely Invoice Act, on Tuesday with the slimmest of margins. Home Republicans are poised to cross the invoice Thursday and ship it to the president for his signature.
The laws provides greater than $4 trillion of web tax cuts over a decade, with most advantages accruing to higher-income households, analyses have discovered. It additionally slashes the social security web, 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.
General, the laws lowers revenue tax charges, exempts a bigger share of rich estates from taxation and provides tax breaks to enterprise house owners. These are among the many core methods the GOP invoice advantages high-income households, Davis mentioned.
It additionally caps the quantity of state and native revenue taxes and property taxes that households can deduct from their taxable revenue annually, at $40,000.
That “SALT” policy does not negatively influence rich residents in states like Wyoming, South Dakota and Texas, the place residents do not owe state revenue tax, Davis mentioned. Nevertheless it has a big influence on states with excessive state and native revenue taxes and property taxes.
In different phrases, high-income residents of Wyoming, South Dakota and Texas typically get a lot of the tax upside and never a lot draw back, he mentioned.
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 revenue 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 cut equal to three.4% of their after-tax revenue in 2026, in response to the Tax Coverage Heart. In the meantime, the underside 20% would get a 0.8% tax minimize.
Its evaluation solely examined the tax parts of the laws.
General, extra complete analyses that additionally account for cuts to packages like Medicaid and the Supplemental Vitamin Help Program, the bottom earners would be worse off, in response to analyses by the Finances Lab at Yale College and the Congressional Finances Workplace, which modeled related laws handed by the Home final month.
