A new analysis of the first year of tax policy under President Trump’s second term finds that the changes made by the president and Congress will increase taxes for most Americans, significantly expand income inequality, and add trillions to the national debt, while delivering substantial tax cuts to high-income households, corporations, and foreign investors.
The report finds that middle-income Americans will pay an average of $900 more in taxes in 2026 compared to what they would have paid if prior policies had remained in place. At the same time, the wealthiest 1 percent are projected to receive at least $1 trillion in tax cuts over the next decade.
“There’s no hiding the fact that the last year of tax policy has driven up costs for most Americans will slashing them for the wealthy,” said Michael Ettlinger, ITEP Senior Fellow and author of the report. “Tariffs and other federal tax increases have blindsided middle- and low-income taxpayers while they wealthy and corporations have received a hugely disproportionate share of the enacted tax cuts.”
Key Findings
- Taxes rising for most Americans: The bottom 95% of taxpayers will see tax increases on average, driven by expanded tariffs and income tax changes.
- Trillion-dollar windfall for the wealthy: The top 1% alone will receive $117 billion in tax cuts in 2026, part of a $1 trillion reduction over 10 years.
- Corporate taxes sharply reduced: Many large, profitable corporations are paying little or no federal income tax following changes in the federal corporate income tax.
- Foreign investors benefit significantly: Foreign shareholders of U.S. companies will receive $32 billion in tax cuts in 2026.
- National debt increases substantially: The tax changes are projected to add $4.6 trillion to the federal debt over the next decade.
The report attributes these outcomes to a combination of:
- Expanded tariff policies that increase costs for consumers
- Extension of prior tax cuts alongside new corporate tax breaks
- Termination of tax credits benefiting lower- and middle-income households
In addition to the tax changes accounted for in the report, the wealthy and corporations will also likely see reduced tax payments due to reduced IRS enforcement.
Overall, the report finds that the first year of the Trump administration’s second-term tax agenda has shifted the responsibility for funding for government toward working Americans while delivering substantial benefits to wealthy individuals, corporations, and foreign investors, with long-term consequences for inequality and the federal budget.
