Keith Mack
President Donald Trump's tax plan, the Tax Cuts and Jobs Act (TCJA), was signed into law in 2017 and took effect in 2018. It was the largest tax code overhaul in three decades, cutting taxes for individuals and businesses. The TCJA introduced broad tax relief, benefiting Americans across the income spectrum. However, critics argue that the highest earners and large businesses benefited the most from the law. The legislation included several provisions, such as increasing the standard deduction, expanding credits, and lowering corporate tax rates. While the TCJA provided tax breaks for some, it also reduced access to crucial tax breaks and public benefits for millions of households, particularly impacting undocumented individuals and those on the path to citizenship. The law also cut funding for essential programs like Medicaid and rural hospitals, which primarily serve low-income communities.
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What You'll Learn
The wealthy and high-income families
The Tax Cuts and Jobs Act (TCJA) was a major overhaul of the tax code, signed into law by President Trump in 2018. The Act introduced tax cuts for both individuals and businesses, with the highest earners expected to benefit the most.
The TCJA nearly doubled the standard deduction and lowered marginal tax rates. While these changes benefited Americans across the income spectrum, the tax deductions for business owners largely helped the wealthy. The legislation also included a permanent lowering of corporate tax rates, which was set to a single flat rate of 21%.
The One Big Beautiful Bill (OBBA), signed into law in 2025, built on the framework of the TCJA by making several temporary provisions permanent. This included maintaining lower individual income tax rates, keeping the larger standard deduction, and continuing the expanded child tax credit. The bill also included a large standard deduction, allowing taxpayers to keep more of their money with a simpler tax break. The OBBA also introduced a \$1,000 'baby bonus' for newborns, with the federal government providing a one-time deposit into savings accounts for every American child from birth.
The combination of the TCJA and OBBA has resulted in significant tax relief for wealthy and high-income families. The highest-income households, those earning over $450,000 per year, are projected to be the "biggest winners" from the extension of the TCJA. They are expected to receive over 45% of the benefits, with an average tax saving of $70,000 in 2027.
In addition to the direct tax cuts, the Trump administration's tax legislation also included other measures that benefited wealthy individuals with significant estates or investment income. The estate and gift tax exemption was preserved at a higher threshold, allowing for greater tax-free wealth transfer through gifts or inheritances. The legislation also proposed eliminating capital gains taxes on primary home sales, which would largely benefit older, higher-income homeowners.
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Small business owners
The One Big Beautiful Bill delivered on Trump's promise to put America First, with tax policies that reward hard work and bring jobs back, benefiting workers, families, farmers, and small businesses.
Small business tax deductions were set to increase from 19% to 23%, creating over 1 million new Main Street small business jobs and generating $750 billion in economic growth at American small businesses. The bill also made permanent the 2017 Trump tax cuts, protecting small businesses from a significant tax hike.
The legislation also expanded and made permanent the 199A small business deduction, allowing small businesses to deduct up to 20% of their business income. This was a critical provision for small businesses, as it allowed them to keep more of their money and invest in their growth.
Additionally, the bill increased the Section 179 Small Business Expensing Cap from $1.25 million to $2.5 million, enabling small businesses to fully expense business equipment purchases in the first year. This was a significant boost for small businesses, as it allowed them to write off the cost of these investments immediately, improving their cash flow.
Trump's tax law also provided benefits for small manufacturers, who are a critical part of the supply chain for larger manufacturers. By making the 2017 tax cuts permanent, small manufacturers could continue to take advantage of provisions such as interest deductibility, full expensing, and research and development credits. This provided certainty and encouraged investment, as small businesses no longer had to worry about the expiration of these tax benefits.
Overall, Trump's tax law provided significant advantages for small business owners, offering tax relief, encouraging investment, and creating a more favourable economic environment for growth and job creation.
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Working families
The impact of the Trump tax law on working families has been a subject of debate, with some arguing that it provided significant benefits to this group.
The 2017 Trump tax cuts, extended by the One Big Beautiful Bill, aimed to provide relief to working-class Americans. It doubled the Child Tax Credit to $2,000 per child, benefiting American families. The bill also included a Social Security Number requirement to ensure that only eligible families received the credit. The bill further increased the Child Tax Credit to $2,200, providing additional support to working parents.
Additionally, the bill addressed rising childcare costs, which had been a burden for low- and middle-income families. It expanded access to childcare and made paid leave tax credits permanent. The bill also provided tax relief for seniors and protected them from a potential tax hike.
The Trump tax law also had broader economic implications. It claimed to boost economic growth, strengthen border security, and expand the energy sector. The tax cuts aimed to put "America First," rewarding hard work and increasing opportunities for the working class.
However, critics argue that the Trump tax law disproportionately benefited the rich. They claim that it failed to deliver on its promises to help low- and middle-income families, instead driving up deficits and eroding the US revenue base. There are concerns about the impact of these tax cuts on the nation's revenue policies and priorities.
In conclusion, while the Trump tax law provided some benefits to working families, particularly through the Child Tax Credit and childcare provisions, there are conflicting views on its overall effectiveness in supporting this demographic.
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Older adults
Trump's "One Big Beautiful Bill" (OBBB) includes a $6,000 bonus deduction for taxpayers aged 65 and above, which could offset federal taxes on Social Security benefits. This means that couples filing jointly can reduce their taxable income by up to $12,000. According to the White House, the bill will increase the percentage of seniors who don't pay taxes on Social Security benefits to 88%. This is because the threshold for income is $25,000 for individuals and $32,000 for couples before benefits are taxed.
The bill also makes permanent the reduced income tax rates enacted during Trump's first term, which were initially set to expire at the end of 2025. The top rate has been lowered from 39.6% to 37%.
The new law also expands the Low-Income Housing Tax Credit, a federal incentive for developers to build and renovate affordable housing. It also extends and expands provisions that benefit people caring for ailing loved ones, via tax credits for employers that offer paid family and medical leave.
While the bill is expected to primarily benefit middle- and upper-middle-class seniors, critics argue that it does not help most low- and middle-income seniors and depletes the Social Security trust funds faster.
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Undocumented people
President Donald Trump has been explicit about his stance on undocumented people in the United States. His administration's policies and executive orders have consistently aimed to restrict undocumented immigrants' access to federal benefits and resources.
Trump has argued that taxpayer-funded benefits should be reserved for American citizens and not "illegal aliens," as he refers to them. He has ended federal benefits for people in the country illegally, including Social Security Act benefits, and has taken steps to prevent them from obtaining benefits under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA).
The Trump administration's actions have had significant impacts on undocumented people's access to healthcare, nutrition, and education. They are generally ineligible for federal benefits such as Social Security, food stamps, and Medicare. They have restricted undocumented immigrants' access to community behavioral health clinics, mental health programs, and substance abuse support services. The administration has also ended free tuition for undocumented students in post-secondary career and technical education programs.
Trump's policies have also affected US citizens with undocumented parents. For example, the law now prevents citizen children from benefiting from the child tax credit if neither parent has a Social Security number. This change has had a particularly negative impact on low-income and immigrant communities.
In contrast, some states have attempted to provide benefits to undocumented immigrants. For example, in New York, community health centers and family planning clinics serve undocumented immigrants, but these could close if they lose federal funding due to challenges in verifying patients' immigration status.
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Frequently asked questions
Trump's tax law benefits business owners, high-net-worth households, some working families, and wealthy individuals with significant estates or investment income.
Trump's tax law cuts taxes for shareholders and businesses, allowing them to retain more profits. It also eliminates taxes on tips, which can increase take-home pay for employees.
Yes, the tax law includes significant funding cuts to key programs such as Medicaid and food stamps, which largely benefit lower-income Americans. It also removes certain education and health-related deductions.
