Nearly half of all middle-class families would pay more in taxes in 2026 than they would under current rules if the proposed House tax bill became law, and about one-third would pay more in 2018, according to a New York Times analysis, a striking finding for a bill promoted as a middle-class tax cut.
President Donald Trump and congressional Republicans have pitched the plan unveiled last week as a tax cut for most Americans. But millions of middle-class families — particularly those with children — would see an immediate tax increase, averaging about $2,000.
Among the hardest-hit under the plan would be some of the most vulnerable taxpayers: those with huge out-of-pocket medical expenses.
By 2026, 45 percent of middle-class families would pay more than what they would under the existing tax system.
The preliminary Times analysis found that, in 2018, the plan would cut taxes for about 68 percent of families in the middle class, broadly defined as those earning between two-thirds and twice the median household income, or between about $50,000 and $160,000 per year for a family of three. For most of those families, the cut would be about $1,300 in 2018. In order to focus on families, the analysis excluded individual filers and households headed by people 65 or older and is adjusted for the size of each household.
The bill is likely to change significantly in coming days. On Monday evening, the House’s tax-writing Ways and Means Committee began the formal process of reviewing the bill, which could involve dozens of amendments, some of them substantial. The bill, which the House could pass as early as this week, is likely to change further in the Senate, where procedural rules place practical limits on how much the plan can add to the federal deficit.
The Times analysis looks at the direct effect of the tax changes on Americans’ incomes and does not account for changes in economic growth that Republicans say will amplify the effect of the tax cut and deliver higher wages to Americans across the income spectrum. Economic models disagree about the size of those effects, but generally agree they would be smaller in the initial years after a bill was passed since the tax cuts would take a while to filter throughout the economy.
Still, Republican leaders in Congress and the White House have not just argued that the bill would have broader economic advantages. Rather, they have repeatedly described it as a tax cut for middle-class families.
“This whole tax reform is designed for the middle-class family that’s working so hard, for that Main Street business that’s working so hard,” Rep. Kevin Brady, R-Texas, chairman of the House Ways and Means Committee, said on MSNBC on Thursday. Sen. Mitch McConnell of Kentucky, the majority leader, went further, telling the MSNBC host Hugh Hewitt over the weekend that “nobody in the middle class is going to get a tax increase” under the bill.
Few independent economists find evidence to support that claim. Analyses published since the plan was introduced last week have consistently found that some middle-class families would see their taxes go up immediately, compared with existing law. One such analysis, from the Institute on Taxation and Economic Policy, found that 8 percent of middle-income earners would pay more in 2018 — and 21 percent in 2027 — with upper-middle-class taxpayers more likely to see their taxes rise.
The Times analysis accounts for the differing financial situations of Americans who look relatively similar on paper. It shows significant differences in how “typical” families might fare under the Republican bill.
Consider, for example, a four-person family earning about $75,000 a year. There are nearly 150,000 such taxpayers in the United States, according to data from the Census Bureau. About two-thirds of them would benefit under the Republican tax plan, with their taxes falling by about $1,500 on average. But the other third’s taxes would go up, by nearly $700 on average, and some would pay thousands of dollars more than under current law.
The bill is designed to allow millions of Americans to simplify their tax returns — to file, as Republican leaders put it, “on a postcard.” The plan would most likely simplify taxes for some taxpayers, who would choose to take advantage of the plan’s more generous standard deduction. But the analysis suggests that among lower- and middle-class families, the greatest benefits of the bill flow to those taxpayers who already file simple returns and do not itemize their taxes.
The millions losing out under the bill would largely be families with more complicated finances, who now generally itemize their deductions. The bill would eliminate many common and valuable tax deductions that, in some cases, would eliminate thousands of dollars in tax benefits. This would be particularly acute for taxpayers who deducted state and local income and property tax payments, interest on student loans, or the cost of health insurance for self-employed workers.
The plan could be particularly costly for Americans facing large medical bills. Nearly 9 million taxpayers collectively deducted about $84 billion in medical expenses from their taxes in 2015. The House bill would eliminate that deduction.
Mark Mazur, director of the independent Tax Policy Center, said any attempt to reform the tax system — as opposed to just a broad-based tax cut — would have winners and losers. But he noted that many of the provisions that would benefit middle-class taxpayers in the House bill were set to expire or lose value over time.
“You could create a plan that just cut taxes for middle-class people,” Mazur said. “That’s not what this is.”
The Times’ figures are based on an analysis of Census Bureau data using a tax model from the Open Source Policy Center, a Washington research organization affiliated with the right-leaning American Enterprise Institute. The organization’s model does not yet fully account for the tax bill’s treatment of pass-through income, which is business income that is taxed at the individual rate under current law. And because the analysis is based on publicly available data, not actual tax records, it may not capture all the intricacies of Americans’ household finances.
The source of the tax increases is rooted in the structure of the Republican bill. The plan would roughly double the size of the standard deduction, to $24,000 for married couples and $12,200 for individuals. That could yield a substantial tax cut for many middle- and lower-income families that now take the standard deduction, or whose itemized deductions amount to less than those thresholds.
But the Republican plan would also eliminate many of the deductions now taken by millions of taxpayers.
Its elimination of the deduction for medical expenses could hit some families particularly hard because medical bills can be so large, unpredictable and unavoidable. Of the roughly 6.5 million middle-class families whose taxes would rise in 2018 under the bill, about 800,000 took advantage of the medical expense provision, deducting more than $17,000 on average from their taxes. Nearly 200,000 middle-class families owed no income tax under the current law at least in part because the medical-expense exemption offset their taxable income.
The Republican proposal would also be costly for many large families. That is because, in addition to raising the standard deduction, the plan would eliminate the personal exemption, which lets most taxpayers deduct about $4,000 for every person in their household. The plan would replace the exemption with an expanded child tax credit, but that would fill only part of the gap for many families. Fewer than 40 percent of middle-class families with at least three children would receive a tax cut under the plan, compared with nearly 80 percent of families without children.
Negotiations over the House bill are continuing, and details could change. In the Senate, Republicans such as Sens. Marco Rubio of Florida and Mike Lee of Utah have pushed to expand the child tax credit further, a move that could mitigate many of the tax increases on middle-class families, but that would force leaders to find other sources of revenue to offset the change.
Democrats, meanwhile, have been quick to seize on analyses finding middle-class tax increases. Sen. Ron Wyden of Oregon last week called the bill “a middle-class con job.”