By Richard Rubin
May 14, 2025 10:40 am ET
The GOP tax bill was advanced in a party-line vote by House Ways and Means Committee members. PHOTO: CHIP SOMODEVILLA/GETTY IMAGESWASHINGTON—The Republican tax bill looks very different depending on your income—and your political lens.
For the top sliver of taxpayers, it gives a permanent extension and expansion of expiring tax cuts from 2017, coupled with some new limits.
Middle-income households would get permanent tax-cut extensions, too. They would also gain temporary tax cuts, including a larger standard deduction and child tax credit and targeted benefits for senior citizens and people receiving tips and overtime pay.
There is relatively little for low-income people who aren’t paying income taxes now, and they will encounter some new complexity when claiming refundable tax credits.
Republicans call this combination a win-win-win, avoiding scheduled tax increases, putting money in taxpayers’ pockets and helping businesses invest. They are moving the legislation through House committees this week and aim to make it law by July 4.
“This is not a bill for billionaire relief,” Rep. Blake Moore (R., Utah) said during a House Ways and Means Committee session that started Tuesday afternoon and finished Wednesday morning with a party-line vote to advance the legislation.
Democrats cast the bill as an unacceptable giveaway to well-off people at the expense of most Americans.
“Billionaires get the gold bars,” said Rep. Judy Chu (D., Calif.). “Working families get the pennies.”
Fights over the distribution of tax legislation are a constant part of Washington fiscal-policy debates. This round is more complicated because it isn’t just a tax bill: The tax provisions will be combined with cuts in Medicaid spending and nutrition assistance and assessed against the backdrop of President Trump’s higher tariffs, changes that will weigh most on lower-income households.
Same tax data, different reads
Republicans and Democrats look at the same tax data and see totally different pictures. Republicans compare the tax cuts to families’ existing bills, showing significant reductions in what middle-class households owe.
Democrats focus on the total dollar amount, emphasizing how much wealthy people would save in comparison to others. By one estimate, that is nearly $65,000 in 2027 for the top 1% vs. about $1,300 for middle-income households. They argue that Congress could simply let tax cuts expire for people at the top.
An analysis from the nonpartisan congressional Joint Committee on Taxation released Tuesday shows that the lowest-income households, who pay very little in taxes already, would see an average federal tax increase in some years, in part because they would lose tax credits that help pay for health insurance. The middle 20% of households would see their average total federal tax rate drop in 2027 to 11.2% from the 12.9% they would pay without the bill.
The top 0.1%, meanwhile, would see their average tax rate drop to 27.7% from 30.3%. They would get a significant tax cut—and pay a greater share of the smaller overall federal tax burden. Those estimates compare with a scenario where the 2017 tax cuts expire. The analysis excludes some provisions, such as the electric-vehicle tax-credit repeals and estate-tax cuts.
Republicans highlight middle-income tax cuts, particularly those that go beyond a straight extension of the 2017 tax cuts scheduled to expire Dec. 31. They constructed the bill so they can offer clear examples of middle-income families who will get and feel tax cuts from 2025 to 2028.
Ways and Means Chairman Jason Smith offered the example of an electric-utility lineman making $40 an hour and a $20 bonus for overtime hours. That person’s 300 hours in overtime would yield a $6,000 tax deduction beyond the standard deduction.
“My priority is the working class because I’m a product of the working class,” said Smith, the chief author of the bill. “This bill delivers for those American families, just like mine, who have struggled to get ahead for far too long.”
Rep. Nicole Malliotakis (R., N.Y.) highlighted the additional $4,000 per-person standard deduction for senior citizens, which starts phasing out when income reaches $75,000 for individuals and $150,000 for married couples.
“I don’t know how anyone can argue something like that goes to benefit the wealthiest,” she said. “We’re fighting for the middle class and that’s who we’re delivering for today.”
GOP lawmakers say workers like electric-utility linemen would get bigger tax deductions for their overtime hours. PHOTO: BRETT COOMER/ASSOCIATED PRESSDemocrats say rich getting most help
Democrats view the same legislation quite differently, pointing to extended and permanent tax cuts for high-income households and estates. They contrast those with the temporary tax-cut boosts for middle-income households and with Medicaid and Obamacare changes that are projected to reduce the number of people with health insurance.
“They’re doing exactly what they set out to do, which was to give more tax breaks to the billionaires, the ultrawealthy and make it permanent at the expense of working people,” said Rep. Jimmy Gomez (D., Calif.) “You’re literally giving us the scraps off the table.”
At the top, the highest income-tax rate will remain at 37%, though top-bracket taxpayers face a new restriction on itemized deductions. The per-person estate tax exemption would climb to $15 million in 2026, higher than what would happen if current inflation indexing were extended.
The bill includes a lower top tax rate for many closely held businesses. Their top rate will drop to 28.5% from 29.6%, though some will lose the ability to escape the cap on state and local taxes through state workaround programs.
Democrats highlighted that the child tax-credit expansion doesn’t increase the benefit for many lower-income households and removes it for families where children are citizens but parents aren’t. The bill also creates a new certification program for the earned-income tax credit, a tax break for low-income workers that has a record of improper payments.