The spokesman for the house Mike Johnson, R-La.
Bill Clark | CQ-Roll Call, Inc. | Getty pictures
A massive package of tax cuts agreed by President Trump, which was adopted on Thursday, would be a windfall for the richest US budgets. However, the size of this financial benefit mainly depends on where taxpayers live with high incomes. This emerges from a new analysis by the Institute for Taxation and Economic Policy.
Legislation would give the top 1% of US households an average tax reduction of around $ 66,000 or about 2.4% of their income in 2026, according to a left-wing thought factory. (These households have income of 917,000 or more per year, which is an average of around 2.7 million US dollars.)
Some households have a much larger tax advantage.
The richest households in three states – Wyoming, South Dakota and Texas – would decrease their annual tax invoices by more than 100,000 US dollars.
In Wyoming, the top -1% would decrease their taxes the most: an average of $ 133,000 (or 3% of income) in 2026, it said. The average income of the top 1% of the state is around 4.5 million US dollars.
“The law is the most advantageous for conservative states that have many very wealthy people who live within their borders,” said Carl Davis, ITEP research director.
These states also do not collect personal income taxes, he said.
Wyoming and Texas “are classic examples of states with many wealthy people and the these wealthy people are incredibly careful,” said Davis.
Why the rich get a large tax cut
The Republicans of the Senate passed the leanest margins on Tuesday, which was originally referred to as a big beautiful bill. The Republicans of the House passed the law on Thursday and sent them to the President for his signature.
Legislation offers more than $ 4 trillion of net tax cuts over a decade. Most advantages for households with higher incomes have found analyzes. The social security network is also reduced and billions of dollars from programs such as medicalaid and food brands are switched off to reduce earnings.
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The heart of the law is an extension of the 2017 tax cuts, which come into force during the first term of office of President Trump.
Overall, the legislation lowers income tax rates, frees a larger proportion of wealthy goods from taxes and offers tax gaps for business owners. This is one of the central possibilities of how the GOP calculation benefits with high incomes, Davis said.
It also limits the amount of state and local income taxes and property taxes, which can deduct the households each year from their taxable income with $ 40,000.
This “salt” policy does not have a negative effect, the wealthy residents in countries such as Wyoming, South Dakota and Texas, in which the residents do not owe state income tax, said Davis. However, it has a major impact on states with high state and local income taxes and property taxes.
In other words, low -income residents of Wyoming, South Dakota and Texas generally have most of the tax upside down and not much, he said.
Conversely, the highest earners in California and New Jersey would achieve a lower tax reduction of an average of 34,000 and 21,000 US dollars in 2026. This corresponds to about 1% of their income in every state.
Separate analyzes have shown that the richest households will use the greatest financial advantages of the GOP bill.
According to the tax policy, the top 20% of US households (which earn more than $ 217,000 per year) would receive a tax reduction of 3.4% of their post-tax results in 2026 in 2026. In the meantime, the lower 20% would receive a tax cut by 0.8%.
His analysis only examined the tax parts of legislation.
Overall, more comprehensive analyzes that also make cuts in programs such as Medicaid and the Supplemental Nutrition Assistance Program would be worse, according to analyzes of the household laboratory of the Yale University and the Congression Budget Office, which modeled similar laws last month.