Trump's Tax Bill Benefits Top 1% Most as Middle-Class Gains Expire 2028

President Donald Trump’s “One Big Beautiful Bill Act,” signed into law this month, has redefined the U.S. tax landscape, delivering uneven benefits across three key income groups. The legislation, which extends and modifies tax cuts from the 2017 law, has sparked debate over its distributional effects, with the Tax Policy Center—backed by the Urban Institute and Brookings Institution—identifying distinct winners and losers.

The most significant gains accrue to households just below the top 1% of earners. These middle-upper-income groups benefit from a combination of expanded deductions, adjusted tax brackets, and preferential rates on capital gains. The Tax Policy Center’s analysis reveals that these households experience the largest proportional reductions in after-tax income, measured relative to their total earnings. This outcome stems from their elevated income levels and access to deductions such as those for tips, overtime wages, and senior-related expenses, which amplify savings as a share of their take-home pay. Critics argue this structure disproportionately favors high-income taxpayers, as their absolute savings—while large in dollar terms—are offset by their higher baseline incomes [1].

Middle-class households, typically earning between $75,000 and $200,000 annually, face a mixed picture. While temporary provisions like enhanced child tax credits and education-related deductions offer short-term relief, these benefits are set to expire by 2028, creating uncertainty. Additionally, the bill’s relaxation of the state and local tax (SALT) deduction cap provides limited relief for taxpayers in high-tax states, but not all qualify. Some middle-income earners may see reduced gains due to cuts in Medicaid funding and other social programs, which indirectly affect their financial stability [2].

Lower-income individuals, who primarily pay payroll taxes rather than income taxes, derive minimal direct benefits. The Tax Policy Center’s models exclude non-income-related cuts, such as reductions in Medicaid or food assistance, which critics argue disproportionately harm this group. Without significant tax liability, their percentage-based savings remain modest. However, modest expansions to the earned income tax credit (EITC) offer limited relief, framed more as politically symbolic than transformative [3].

High-net-worth individuals and corporations also receive enduring advantages. The bill permanently lowers the corporate tax rate to 21% and extends favorable rates for pass-through businesses and high-income earners. While these changes align with supply-side economics, opponents argue they exacerbate inequality by concentrating benefits among the wealthiest. Additionally, the legislation allocates subsidies to profitable sectors like fossil fuels and agriculture, further concentrating gains among established corporations [4].

The bill’s structure reflects a broader ideological shift toward deregulation and tax simplification, but its long-term fiscal implications remain contentious. Proponents highlight potential economic growth from reduced corporate costs, while critics warn of a growing deficit due to revenue losses and expanded spending on defense and border security. Temporary provisions, such as the SALT refund program, require future legislative renewal, complicating budget planning for states and taxpayers [5].

Analysts emphasize that geographic and occupational factors further diversify outcomes. High earners in states with stringent local taxes may face higher effective tax burdens due to the SALT deduction cap. Meanwhile, mid-level earners in high-tax states benefit from relaxed SALT rules, illustrating the bill’s uneven geographic impact. These nuances underscore the complexity of assessing its overall efficacy [6].

Sources:

[1] [How Trump's big beautiful bill affects the 3 main income...](https://www.mitrade.com/au/insights/news/live-news/article-3-989327-20250726)

[2] [How the Trump Tax Plan Will Affect You](https://smartasset.com/taxes/heres-how-the-trump-tax-plan-could-affect-you)

[3] [There are some tax benefits for the middle class in Trump's...](https://www.berkshireeagle.com/business/columnist/there-are-some-tax-benefits-for-the-middle-class-in-trumps-big-bill-heres-what/article_c579c5b6-42cb-494d-98a5-f4004135c035.html)

[4] [Winners and Losers in the One Big Beautiful Bill Act](https://www.taxpayer.net/budget-appropriations-tax/winners-and-losers-in-the-one-big-beautiful-bill-act/)

[5] [Trump's 'Big, Beautiful Bill': Here's When Key Tax Laws Go...](https://www.bankrate.com/taxes/trumps-tax-law-when-key-tax-breaks-go-into-effect/)

[6] [Trump's Big Beautiful Bill in Summary](https://www.chase.com/personal/investments/learning-and-insights/article/trumps-big-beautiful-bill-our-latest-insights-and-potential-impact-for-investors)