Middle Class Tax Cut Act
Sponsored By: Representative Thanedar, Shri [D-MI-13]
Introduced
Summary
Major overhaul of individual income tax rates. This bill would rewrite the tax rate tables for every filing status, greatly increase the statutory standard deduction figures, and eliminate the lower tax rates that apply to capital gains.
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- Households and individual taxpayers would face a new rate structure that starts at a 25% baseline and rises to top marginal rates as high as 70% for very high incomes. The brackets and thresholds differ by filing status.
- The law would raise the code’s standard deduction figures to $75,000 and $50,000 in the amended lines of the Internal Revenue Code, changing the baseline deduction many taxpayers can claim.
- Investors would lose the special reduced rates for capital gains. Capital gains would be taxed under the new ordinary-income rate tables instead of at lower, separate rates.
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Bill Overview
Analyzed Economic Effects
3 provisions identified: 1 benefits, 1 costs, 1 mixed.
Bigger standard deduction for taxpayers
If enacted, the bill would raise certain statutory standard deduction dollar figures. The listed amounts in the cited subparagraphs would become $75,000 and $50,000. The bill ties those numbers to calendar year 2025 and updates cross-references to 2026. These changes would apply to tax years beginning after December 31, 2025. If you claim the standard deduction, you would use the new numbers.
Higher income taxes for middle and high earners
If enacted, this bill would replace federal individual tax rate tables and repeal the lower capital gains rates. For joint filers, income up to $200,000 would be taxed at 25% and income over $2,000,000 would face a 70% marginal rate. Heads of household would pay 25% up to $150,000 and 70% over $1,500,000. Single filers and married filing separately would pay 25% up to $100,000 and 70% over $1,000,000. Estates and trusts would face 70% on income above $20,000. These changes would apply to tax years beginning after December 31, 2025. If you have taxable income or capital gains in these ranges, you would likely pay more federal tax.
Tax code reference updates and removals
If enacted, the bill would make administrative edits to tax code headings, year references, and cross-references to match the new rate tables. It would change wording on who certain bracket rules apply to and restore a cost-of-living tie to 2026 for bracket adjustments. The bill would also strike one paragraph of section 1(f) and remove subsections (i) and (j) of section 1. These changes would apply to tax years beginning after December 31, 2025. These edits are mainly technical but could affect how bracket indexing and certain rules apply.
Sponsors & CoSponsors
Sponsor
Thanedar, Shri [D-MI-13]
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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