How Trump’s big beautiful bill affects the 3 main income groups

President Donald Trump signed the One Big Beautiful Bill Act into law from the White House this month, and the central question now is who actually walked away with the largest tax cut. 

The law includes several tax changes meant to cover a wide range of American households and businesses, but the real impact wasn’t split evenly across the board.

According to a full breakdown by the Tax Policy Center, backed by the Urban Institute and Brookings Institution, the biggest winners weren’t the poor or the ultra-rich—but the group right below the top 1%.

The law extends tax cuts originally passed in 2017 that were set to expire at the end of last year. It also adds new reductions for specific types of income and expenses: tips, overtime wages, senior-related income, and car loan interest payments.

Business tax rules also got a refresh, while the deduction cap on state and local taxes (SALT) was eased for a narrow slice of taxpayers. But once the raw numbers were broken down, it became clear that the size of the tax break depended entirely on income level, tax status, and location.

Middle-upper group gained the most

The Tax Policy Center didn’t factor in Trump’s cuts to Medicaid or food assistance programs, which are set to hurt lower-income Americans in other ways. Their models focused only on the tax changes. And to avoid inflating assumptions, they compared the new system with a hypothetical 2025 in which Congress didn’t extend the 2017 cuts. This comparison lets analysts isolate the effects of Trump’s law without exaggerating them.

To understand how the cuts play out across income groups, analysts used a model based on a sample of 100 people arranged by income. They didn’t rely on adjusted gross income but used a broader measure called expanded cash income, which includes wages, business earnings, investments, untaxed benefits like health insurance, and some government transfers like SNAP. This approach gives a clearer picture of what Americans really earn and what they keep.

The overall result: people just below the top 1% ended up with the most significant tax benefit when measured as a share of after-tax income. This means the cuts made the biggest real-world difference to them—not necessarily in dollars, but in how it affected their total take-home.

Lower earners saw percentage-based improvements because they start with smaller tax bills, but their absolute savings remained modest. At the top, the raw dollar cuts were large, but their relative benefit shrank because of higher income baselines.

Top group still paid more but got cuts; some still lost

Income distribution plays a big role here. High earners pay most of the country’s federal income tax, so when broad cuts go into effect, they get the largest dollar amount back. Democrats have repeatedly called this structure unfair, arguing it’s a handout to the rich.

But Republicans kept all parts of the 2017 tax law intact, including those favoring high earners and pass-through businesses, which are taxed under individual income rules. That was intentional.

Even within the same income group, outcomes vary depending on where people live and how they make their money. Some high earners in states with high local taxes may actually end up with a higher bill this year. That’s due to the SALT deduction cap staying in place. Others will lose out on tax breaks related to gambling losses or dependent college students.

Those on the lowest rung, people who don’t pay income taxes and only pay payroll taxes, won’t notice much difference. The tax changes weren’t built to impact them significantly. Meanwhile, a few upper-middle-income earners could end up paying more depending on which deductions they qualify for and how their income is structured.

The last way analysts looked at this law was by comparing it to a version where 2024’s tax rules simply stayed the same. That version wouldn’t include Trump’s new deductions on tips and overtime or the more relaxed SALT deduction limit.

These updates created more visible changes for working-class families and mid-level earners in high-tax states. But in the big picture, none of that changed the core outcome.

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