Contact: Jon Whiten ([email protected])
With Senate Republicans hoping to hold a vote soon on their version of the tax and spending package passed by the House last month, a new national and state-by-state analysis from the Institute on Taxation and Economic Policy (ITEP) finds that, like the House-passed bill, the Senate proposal favors the richest taxpayers and provides working-class Americans with relatively small tax cuts that would in many cases be more than offset by the import taxes, or tariffs, imposed by President Trump.
“There a plenty of technical differences between the House and Senate versions of this legislation, but the bottom line for both is the same,” says ITEP Federal Policy Director Steve Wamhoff. “Both bills give more tax cuts to the richest 1 percent than to the entire bottom 60 percent of Americans and both bills particularly favor high-income people living in more conservative states.”
Key findings:
- 69 percent of the net tax cuts would go to the richest fifth of Americans in 2026, only 11 percent would go to the middle fifth of Americans, and less than 1 percent would go to the poorest fifth.
- The richest 1 percent of Americans would receive an average net tax cut of $61,000, many, many times more than the average tax cut received by other income groups.
- The $107 billion in net tax cuts going to the richest 1 percent next year would exceed the amount going to the entire bottom 60 percent of taxpayers (about $76 billion).
- The effects of President Trump’s tariff policies alone offset most of the tax cuts for the bottom 80 percent of Americans. For the bottom 40 percent of Americans, the tariffs impose a cost that is greater than the tax cuts they would receive under this legislation.
- Even foreign investors who own shares in U.S. companies would benefit more than many Americans. These foreign investors would enjoy $31 billion in tax cuts in 2026 compared to just $1.5 billion for the bottom 20 percent of Americans.
- The legislation provides the greatest rewards to high-income people living in states that have low state and local taxes on the wealthy. The states where the richest 1 percent of residents receive the largest average net tax cuts would mostly be states that have particularly unfair tax systems because they have no personal income tax.
These figures do not include other potential costs to families in the bill, such as deep cuts to Medicaid and food assistance. These cuts would have adverse health and financial implications for families that directly benefit from these programs. The cuts would also harm others in communities that are broadly dependent on these funding streams—such as rural communities, which would see hospital closings.
