A new report from the nonpartisan Joint Committee on Taxation outlines how the House-passed 2025 tax bill could impact Americans across different income levels. The analysis covers expected changes to federal taxes through the year 2033, based on provisions approved by the House on May 22.
The report estimates the effect of the proposed tax code changes for calendar years 2027, 2029, 2031, and 2033. While nearly all income groups would see some level of tax reduction initially, the size and duration of the benefit vary significantly depending on household income.
Tax Relief in Early Years, Especially for Lower Earners
In 2027, Americans earning less than $30,000 annually are projected to see the largest percentage drop in federal taxes. For example, those earning under $15,000 could see their federal taxes fall by more than 70% in that year. However, the dollar amount of the tax cut is small compared to higher earners, and much of this relief comes from temporary measures that expire after 2028.
Households earning between $30,000 and $100,000 would also benefit, with tax cuts ranging from about 6% to 13% in 2027. This group includes the majority of middle-income earners, who stand to gain from the continuation of expanded standard deductions, enhanced child tax credits, and deductions for business income.
Middle-Income Households See Sustained Benefits
For those making between $40,000 and $150,000, the report projects consistent tax reductions through 2033. Although the percentage cuts become smaller after 2029, most middle-income earners will continue to owe less in federal taxes than they would under current law.
By 2033, households earning $50,000 to $60,000 are expected to pay about 6.8% less in federal taxes than they would otherwise. Those earning $80,000 to $100,000 would see about a 7.3% decrease.
High-Income Households Get Larger Dollar Cuts
The highest-income households—those earning over $500,000 annually—would receive the largest tax savings in dollar terms. However, the percentage of income saved is smaller compared to lower-income groups.
In 2027, households earning over $1 million would see their federal tax bills decline by 8.1%, but that benefit drops to 2.9% by 2033. Their average effective tax rate would remain high, falling only slightly from 30.3% to 28.9%.
Changes After 2028 Reduce Benefits for Some
Many of the tax cuts set to benefit low- and moderate-income households are temporary. Provisions like enhanced refundable tax credits and exclusions on overtime pay are scheduled to expire after 2028.
By 2033, the lowest-income households (those earning under $15,000) are expected to pay more in taxes than they did in 2027. The average tax rate for this group would rise from around 0.6% to 1.4%, according to the report.
Overview by Income Group in 2033
| Income Range | Estimated Tax Change (2033) | Average Tax Rate Under Proposal |
|---|---|---|
| Under $15,000 | +$6.3 billion (↑128.6%) | 1.4% |
| $15,000–$30,000 | –$9.4 billion (↓4.8%) | 8.3% |
| $30,000–$60,000 | –$44.7 billion (↓~7.5%) | ~11%–12% |
| $60,000–$100,000 | –$45.5 billion (↓7.4%) | 12.1%–14.3% |
| $100,000–$200,000 | –$102.3 billion (↓~7.1%) | 18.2%–18.5% |
| $200,000 and up | –$254.2 billion (↓~6.1%) | 22.8%–29.5% |
Note: These figures reflect federal tax estimates only and exclude indirect effects.
What’s Driving the Changes?
The tax bill includes extensions of several provisions originally passed under the 2017 Tax Cuts and Jobs Act, including:
- A higher standard deduction
- Expanded child tax credit
- Deductions for qualified business income
- Caps on itemized deductions and state and local tax (SALT) deductions
- The elimination or phase-out of clean energy and other tax credits
Some provisions are permanent, while others sunset in 2028, leading to shifting impacts over time.
Final Summary
In the near term, most households will pay less in federal taxes under the proposed changes, with middle-income families seeing the most sustained benefit. However, lower-income families may face higher tax bills after temporary credits expire. High-income households will continue to contribute the largest share of total federal revenue but also stand to save significant amounts.
The Senate has not yet voted on the bill, and provisions may change in the final version.
Sources: Joint Committee on Taxation, JCX-27-25, released June 9, 2025
Reader Interactions