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 stunning invoice” reconciliation bundle on July 3, 2025.
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A large bundle of tax cuts President Trump signed into regulation on Friday 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 response to a brand new evaluation 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 earnings, in 2026, in response to ITEP, a left-leaning suppose tank. (These households have incomes of $917,000 or extra per 12 months, averaging about $2.7 million, it mentioned.)
Some households stand to get a a lot greater 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 earnings) in 2026, it mentioned. The typical earnings of the highest 1% within the state is about $4.5 million.
“The invoice is most advantageous to conservative-leaning states which have lots of very rich individuals dwelling inside their borders,” mentioned Carl Davis, ITEP’s analysis director.
These states additionally do not levy private earnings taxes, he mentioned.
Wyoming and Texas “are traditional examples of states with lots of rich individuals and which tax these rich individuals extremely calmly,” Davis mentioned.
Why the rich get a big tax lower
Senate Republicans handed the laws, initially referred to as the One Massive Lovely Invoice Act, on Tuesday with the slimmest of margins. Home Republicans handed the invoice on Thursday, and despatched it to the president for his signature.
The laws provides greater than $4 trillion of web tax cuts over a decade, with most advantages accruing to higher-income households, analyses have discovered. It additionally slashes the social security web, reducing billions of {dollars} from applications 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.
General, the laws lowers earnings tax charges, exempts a bigger share of rich estates from taxation and provides tax breaks to enterprise homeowners. These are among the many core methods the GOP invoice advantages high-income households, Davis mentioned.
It additionally caps the quantity of state and native earnings taxes and property taxes that households can deduct from their taxable earnings every year, at $40,000.
That “SALT” coverage would not negatively impression rich residents in states like Wyoming, South Dakota and Texas, the place residents do not owe state earnings tax, Davis mentioned. Nevertheless it has a big impression on states with excessive state and native earnings taxes and property taxes.
In different phrases, high-income residents of Wyoming, South Dakota and Texas usually get many of the tax upside and never a lot draw back, he mentioned.
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 earnings in every state.
Separate analyses have discovered that the wealthiest households will reap the most important monetary advantages from the GOP invoice.
The highest 20% of U.S. households (incomes greater than $217,000 a 12 months) would get a tax lower equal to three.4% of their after-tax earnings in 2026, in response to 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.
General, extra complete analyses that additionally account for cuts to applications like Medicaid and the Supplemental Vitamin Help Program, the bottom earners can be worse off, in response to analyses by the Finances Lab at Yale College and the Congressional Finances Workplace, which modeled related laws handed by the Home final month.
