Speaker of the House Mike Johnson, R-La., speaks to reporters as he walks back to his office as the House of Representatives waits to vote on President Trump’s “big beautiful bill” reconciliation package on July 3, 2025.<\/p>\n
Bill Clark | CQ-Roll Call, Inc. | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n
A massive package of tax cuts<\/a> President Trump signed into law on Friday would be a windfall<\/a> for the wealthiest U.S. households. But the size of that financial benefit depends largely on where high-income taxpayers<\/a> live, according to a new analysis<\/a> by the Institute on Taxation and Economic Policy.<\/p>\n The legislation would give the top 1% of U.S. households an average tax cut of about $66,000, or about 2.4% of their income, in 2026, according to ITEP, a left-leaning think tank. (These households have incomes of $917,000 or more per year, averaging about $2.7 million, it said.)<\/p>\n Some households stand to get a much bigger tax benefit.<\/p>\n<\/div>\n The wealthiest households in three states \u2014 Wyoming, South Dakota and Texas \u2014 would see their annual tax bills fall by more than $100,000, ITEP found.<\/p>\n In Wyoming, the top 1% would see their taxes fall most: by an average of about $133,000 (or 3% of income) in 2026, it said. The average income of the top 1% in the state is about $4.5 million.<\/p>\n<\/div>\n “The bill is most advantageous to conservative-leaning states that have a lot of very wealthy people living within their borders,” said Carl Davis, ITEP’s research director.<\/p>\n These states also don’t levy personal income taxes, he said.<\/p>\n Wyoming and Texas “are classic examples of states with a lot of wealthy people and which tax those wealthy people incredibly lightly,” Davis said.<\/p>\n<\/div>\n Senate Republicans passed the legislation<\/a>, originally called the One Big Beautiful Bill Act, on Tuesday with the slimmest of margins. House Republicans passed the bill<\/a> on Thursday, and sent it to the president for his signature.<\/p>\n The legislation offers more than $4 trillion of net tax cuts over a decade, with most benefits accruing to higher-income households, analyses have found. It also slashes the social safety net, cutting billions of dollars from programs like Medicaid and food stamps meant to help lower earners.<\/p>\n More from Personal Finance:<\/strong> The centerpiece of the bill is an extension of 2017 tax cuts enacted during President Trump’s first term in office.<\/p>\n Overall, the legislation lowers income tax rates, exempts a larger share of wealthy estates from taxation and offers tax breaks to business owners. These are among the core ways the GOP bill benefits high-income households, Davis said.<\/p>\n It also caps the amount of state and local income taxes and property taxes that households can deduct from their taxable income each year, at $40,000.<\/p>\n<\/div>\n That “SALT” policy<\/a> doesn’t negatively impact wealthy residents in states like Wyoming, South Dakota and Texas, where residents don’t owe state income tax, Davis said. But it has a large impact on states with high state and local income taxes and property taxes.<\/p>\n In other words, high-income residents of Wyoming, South Dakota and Texas generally get most of the tax upside and not much downside, he said.<\/p>\n Conversely, the highest earners in California and New Jersey would see a smaller tax cut in 2026, averaging about $34,000 and $21,000, respectively, ITEP found. That represents about 1% of their income in each state.<\/p>\n<\/div>\n Separate analyses have found that the wealthiest households will reap the largest financial benefits from the GOP bill.<\/p>\n The top 20% of U.S. households (earning more than $217,000 a year) would get a tax cut<\/a> equivalent to 3.4% of their after-tax income in 2026, according to the Tax Policy Center. Meanwhile, the bottom 20% would get a 0.8% tax cut.<\/p>\n Its analysis only examined the tax portions of the legislation.<\/p>\nWhy the wealthy get a large tax cut<\/h2>\n
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