Low-Income Households (Under $50,000 AGI)

Tax relief of $630 will be received by the households earning between $40,000 and $50,000 (1.5% after-tax income increase). Households earning an income of $34,600 (bottom quintile) will receive tax relief of Rs. $150 (0.8% increase).

• Child Tax Credit (CTC): Beginning in 2025, families can now get up to $2,200 per child, with $1,400 of it refundable, meaning individuals can get it even if they are not liable to pay taxes.
• Standard Deduction: The amount of income not taxed has gone up to $15,750 for single filers and $31,500 for couples, plus an extra $750 from 2025 to 2028.
• Offset by Cuts: To facilitate paying for these tax breaks, the government plans to cut $1 trillion from Medicaid, which could cause 12 million people to lose health coverage by 2034. Also, stricter SNAP (food stamp) work rules, requiring 80 hours of work per month, may cause millions to lose food assistance, reducing the impact of the tax benefits.

Middle-Income Households ($50,000–$200,000 AGI)

Households earning between $50,000 and $75,000 will receive tax relief of $1,000 (1.9% increase). Individuals earning between $75,000 and $100,000 will get tax relief of $1,700 (2.3% increase), and those between $100,000 and $200,000 will get $3,000 (2.5% increase).

• No Tax on Tips and Overtime (2025–2028): If an individual makes less than $150,000 (single) or $300,000 (joint), he/she will not have to pay tax on: Up to $25,000 in tips and up to $12,500 in overtime pay (or $25,000 if filing jointly).
• SALT Deduction: From 2025 to 2029, you can deduct up to $40,000 of your state and local taxes from your income taxes. This benefit slowly decreases if you earn more than $500,000. It assists individuals who live in states with high taxes in saving money.

High-Income Households ($217,000+ AGI)

Households earning income between $217,000 and $318,000 will enjoy tax relief of $5,400 (2.6% increase). Those earning between $318,000 and $460,000 (90th–95th percentile) will receive tax relief of Rs. 21,000 (4.4% increase). The richest 1% of people who earn more than $1.1 million will see their income go up by 3.5%, and the top 0.1% who earn over $5 million will get a 3.2% increase. On average, the top 20% of earners will get about $12,500 more.

• Estate Tax: If an individual is single and has $30 million or if married, then he/she can enjoy a tax exemption of up to $15 million. This change will last forever, starting in 2026.
• QBI Deduction: If an individual owns a pass-through business, then he/she can now deduct 23% of his/her qualified business income from his/her taxes. This increase is permanent.

Other New Tax Cuts

• Senior Deduction: If an individual’s age is over 65, then he/she can get a $6,000 tax deduction that helps lower the Social Security taxes you owe. This starts in 2025 and lasts until 2028.
• Car Loan Interest: If an individual earns less than $150,000 annually, then he/she can deduct up to $2,500 of the interest they pay on a car loan starting in 2025.
• Temporary Rules: The tax breaks for seniors, tips, and overtime will end in 2028. By 2030, about 70% of households will still get some tax breaks, but that’s less than the 85% who get them in 2026.