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 “massive lovely invoice” reconciliation package deal on July 3, 2025.
Invoice Clark | CQ-Roll Name, Inc. | Getty Pictures
An enormous package deal of tax cuts championed by President Trump and awaiting a closing vote within the Home can 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 accordance with a brand new analysis by the Institute on Taxation and Financial Coverage.
The laws would give the highest 1% of U.S. households a median tax lower of about $66,000, or about 2.4% of their revenue, in 2026, in accordance with ITEP, a left-leaning assume tank. (These households have incomes of $917,000 or extra per yr, 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 median of about $133,000 (or 3% of revenue) in 2026, it stated. The typical revenue of the highest 1% within the state is about $4.5 million.
“The invoice is most advantageous to conservative-leaning states which have numerous very rich individuals dwelling inside their borders,” stated Carl Davis, ITEP’s analysis director.
These states additionally do not levy private revenue taxes, he stated.
Wyoming and Texas “are basic examples of states with numerous rich individuals and which tax these rich individuals extremely flippantly,” Davis stated.
Why the rich get a big tax lower
Senate Republicans handed the laws, initially referred to as the One Large Stunning Invoice Act, on Tuesday with the slimmest of margins. Home Republicans are poised to move the invoice Thursday and ship 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, slicing 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 revenue 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 revenue taxes and property taxes that households can deduct from their taxable revenue annually, at $40,000.
That “SALT” coverage does not negatively affect rich residents in states like Wyoming, South Dakota and Texas, the place residents do not owe state revenue tax, Davis stated. Nevertheless it has a big affect 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 many of the tax upside and never a lot draw back, he stated.
Conversely, the very best earners in California and New Jersey would see a smaller tax lower 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 yr) would get a tax cut equal to three.4% of their after-tax revenue in 2026, in accordance with the Tax Coverage Heart. In the meantime, the underside 20% would get a 0.8% tax lower.
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 Diet Help Program, the bottom earners can be worse off, in accordance with analyses by the Finances Lab at Yale College and the Congressional Finances Workplace, which modeled related laws handed by the Home final month.
