Middle Class Tax Cut Act
Sponsored By: Representative Thanedar
Introduced
Summary
This bill would restructure individual income tax rates and raise the standard deduction levels for certain filing categories. It would also repeal reduced capital gains rates and reset how brackets are indexed using a 2026 baseline.
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- Families and households: Raises the standard deduction amounts to $75,000 and $50,000 for specified filing categories, lowering taxable income for many households.
- Individual filers and high earners: Rewrites tax brackets for joint returns, heads of household, and a new "other individuals" category into multi-tier schedules. Top marginal rates rise to 70% for the highest earners, for example joint filers over $2 million, and the bill repeals reduced capital gains rates.
- Rules and indexing: Changes bracket indexing to use a 2026 baseline and removes legacy marriage-penalty mechanics in the Internal Revenue Code.
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Bill Overview
Analyzed Economic Effects
3 provisions identified: 1 benefits, 1 costs, 1 mixed.
Much bigger standard deductions for taxpayers
This bill would raise two statutory standard deduction dollar amounts sharply. One amount would become $75,000 and the other would become $50,000. It would add technical cross-reference and year language tied to 2026. These changes would apply to taxable years beginning after December 31, 2025. If enacted, taxpayers whose standard deduction is set by these parts would see much larger statutory deductions and lower taxable income.
New tax rate tables for individuals
This bill would replace individual income tax rate tables with new multi-bracket schedules. For married couples the first bracket would be 25% up to $200,000 and the top 70% rate would start over $2,000,000. Heads of household, single filers (the bill calls them "Other Individuals"), and estates and trusts would get their own new bracket cutoffs and marginal rates, including 25%, 30%, 40%, 50%, and 70% tiers. The bill would also update bracket indexing and some cross-references, and it would strike two existing subsections. These changes would apply to taxable years beginning after December 31, 2025. If enacted, some taxpayers would pay less and others would pay more depending on income and filing status.
Repeal of lower capital gains rates
The bill would strike the rule that gave reduced tax rates on capital gains. If enacted, net capital gains would no longer be taxed under those special lower rates and instead would be taxed under the remaining applicable rules starting in tax years after December 31, 2025. Investors and taxpayers with capital gains income would be most directly affected and could pay more tax.
Sponsors & CoSponsors
Sponsor
Thanedar
MI • D
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
No roll call votes available for this bill.
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