How the Tax Cuts and Jobs Act Continues to Benefit American Families

In the realm of American politics, facts often take a backseat to rhetoric. This is especially true in the ongoing debate regarding the Tax Cuts and Jobs Act of 2017, a cornerstone of President Donald Trump’s initial economic agenda. As discussions swirl around whether to extend individual tax cuts from this legislation, misinformation from certain political factions and media outlets is becoming increasingly prevalent.

The narrative that the TCJA represents a “wealth transfer” harming working families or a “giveaway to billionaires” lacks credibility. In fact, these claims misrepresent the financial realities of many American taxpayers.

Earlier this month, I co-authored a detailed policy analysis published by The Heartland Institute. Our team aimed to assess whether the Republican tax law continues to provide savings to taxpayers and, if so, to quantify those savings.

The findings reveal a striking picture: lower- and middle-income Americans have predominantly benefited from the TCJA’s tax reductions. Our estimates indicate that millions of taxpayers have saved thousands of dollars as a direct result of this legislation. These valuable savings are at risk if Congress neglects to extend these tax cuts before they are set to expire at the end of 2025.

Utilizing IRS data allowed us to compute the average tax contributions for various income brackets from 2017 to 2022. Although the TCJA was enacted in 2017, its benefits took effect in 2018. By comparing these data points, we can accurately evaluate the law’s impact on families and individuals.

The IRS data consistently shows that all income brackets experienced reductions in their tax obligations due to the TCJA, with the most meaningful relief going to taxpayers earning under $75,000. For instance, the average filer within the “$40,000 under $50,000” income bracket saw an 18.8 percent decrease in tax payments by 2022 compared to 2017.

Additionally, those within the “$50,000 under $75,000” bracket recorded a 16.5 percent reduction in their tax bills over the same timeframe. In contrast, individuals earning between $5 million and $10 million experienced only a 2.3 percent reduction, which counters the narrative suggesting the legislation disproportionately benefited the ultra-wealthy.

Critics of the TCJA often argue that while middle-income filers did receive substantial tax rate cuts, those did not translate into significant dollar savings. However, this assertion is misleading. Our comprehensive analysis indicates that between 2018 and 2022, taxpayers earning between $50,000 and $75,000 saved an average of $4,516, while those in the $75,000 to $100,000 range saved $5,923. Households earning between $100,000 and $200,000 benefitted even more, with average savings climbing to $9,638 over five years.

Moreover, these figures do not capture the full picture as the latest IRS data covers only up to 2022. To provide a forward-looking assessment, we projected potential savings for 2023 and 2024, assuming consistent annual trends. This analysis reveals even more substantial potential benefits.

By 2022, more than 50 million middle-class families fell within income brackets that could expect savings ranging from $6,322 to $13,494 in total. Remarkably, lower-income and working-class Americans are also experiencing notable tax relief, with estimates indicating that households earning between $30,000 and $50,000 saved between $2,537 and $3,833 during the same periods.

This apparent progression within the tax system is ironic given that opponents of the TCJA label it as a boon for the wealthy. Our study shows the evolution of the tax burden across income brackets, illustrating that in 2022, taxpayers earning less than $200,000 contributed a smaller share of total personal income tax compared to their contributions in 2017. Conversely, higher-income brackets above $200,000 are now shouldering a larger portion of the tax revenue.

This data signifies a crucial counterpoint to the allegations made by some Democratic leaders. While every income group benefited from tax reductions under the TCJA, wealthier filers have come to pay a more substantial share of personal tax revenue than before—contrary to claims suggesting the measure primarily served the rich.

Should Congress take no action, the individual income tax cuts established in the TCJA will end in 2025. This scenario could lead to considerable tax increases for tens of millions of American families, with annual tax burdens rising by $900 or more for many middle-income households.

While Washington insiders might remain unaware of the consequences, working families are likely to feel the impact acutely. This discussion is not merely about President Trump or partisan conflicts. It centers on whether the government should impose a heavier financial load on families already grappling with inflation and stagnant wages.

The evidence is overwhelmingly clear. The Tax Cuts and Jobs Act has delivered financial benefits for all taxpayers, with a particular emphasis on working-class and middle-income families. It is essential to clarify the facts surrounding these tax reductions and advocate for their permanence.