Working Americans’ Tax Cut Act

Key Points

• The bill creates a "cost-of-living exemption" that shields the first $46,000 of income from federal tax for single filers, $92,000 for married couples filing jointly, and $64,400 for heads of household. These amounts rise automatically with inflation each year.
• Workers earning less than about $80,500 (175% of $46,000) as single filers qualify for the new tax cap. Their total federal income tax would be limited to 25.5% of whatever they earn above the cost-of-living exemption, potentially cutting their tax bills significantly.
• To offset the revenue loss, the bill imposes a new surcharge on very high earners: 5% on income between $1 million and $2 million, 10% on income between $2 million and $5 million, and 12% on income above $5 million. These thresholds are also adjusted for inflation.
• For married couples filing jointly, the surcharge thresholds are 50% higher — meaning the 5% surcharge kicks in at $1.5 million instead of $1 million. Charitable trusts are exempt from the surcharge entirely.
• Both the tax cut and the surcharge would take effect for tax years beginning after December 31, 2025 — meaning they would first apply to taxes filed in early 2027 for the 2026 tax year. The bill was introduced by Sen. Van Hollen with 18 Democratic co-sponsors.

Votes

No votes have been recorded for this legislation yet.