The Working Americans' Tax Cut Act creates two main tax changes: a lower maximum tax rate for low- and middle-income earners, and a new surcharge on high-income individuals. For lower earners, the bill caps the tax rate at 25.5 percent on income above a "cost-of-living exemption"—set at $46,000 (adjusted annually for inflation) for single filers, $92,000 for joint filers, and $64,400 for heads of household—applying to individuals earning less than 175 percent of that exemption. Simultaneously, the bill imposes a new surcharge on high earners: 5 percent on income between $1 million and $2 million, 10 percent on income between $2 million and $5 million, and 12 percent on income exceeding $5 million (with these thresholds adjusted for inflation and increased by 50 percent for joint filers). Both provisions take effect for tax years beginning after December 31, 2025, and the thresholds will be adjusted annually for inflation. The bill affects individual taxpayers across the income spectrum while exempting certain groups, such as charitable trusts.
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