Did Trump Raise Taxes on the Rich? The Dropped Proposal and Who Pays More

No. Trump did not raise taxes on the rich. He briefly suggested doing so in May 2025, but the idea was dropped during congressional negotiations, and the tax law he signed on July 4, 2025 — the One Big Beautiful Bill Act — permanently locked in the lower 37% top rate from his 2017 tax law and added a package of provisions that, according to multiple independent analyses, direct most of their benefits to high-income households and corporations.

The Proposal He Floated and Then Dropped

On May 8, 2025, Trump raised the idea of a higher top tax rate in a phone call with House Speaker Mike Johnson. The next day he posted on Truth Social that he would “graciously accept” the increase to help “lower and middle income workers.”¹ The proposal would have restored the 39.6% rate that applied from 2013 through 2017, before his Tax Cuts and Jobs Act brought it down to 37%.

The threshold was set unusually high. The higher rate would have kicked in only on taxable income above $2.5 million for single filers and $5 million for married couples.² The Tax Foundation estimated a 39.6% bracket at the $2.5 million threshold would raise about $67 billion over ten years, a fraction of the bill’s multitrillion-dollar cost. Only about 0.5% of taxpayers reported adjusted gross income above $1 million in 2022, and setting the threshold at $2.5 million meant the provision would touch very little of wealthy taxpayers’ total income.³

The idea did not survive. During the Senate’s amendment session, Senator Susan Collins proposed a higher tax on the wealthy to fund hospital stabilization, and the amendment fell short.⁴ The final law kept the 37% top rate from the 2017 law and made it permanent.⁵

What the Law Did for Wealthy Taxpayers Instead

Rather than raising rates on the rich, the One Big Beautiful Bill Act cut their taxes in several ways at once.

The 37% top marginal rate became permanent, blocking the scheduled reversion to 39.6%.⁶⁷

The Section 199A pass-through deduction, which lets owners of partnerships, S corporations, and sole proprietorships deduct 20% of qualified business income, was made permanent, and the phase-in thresholds for certain limitations were raised so more high-income owners can claim the full deduction.⁸ Pass-through owners earning $1 million or more accounted for about 34.7% of all pass-through income in 2022, according to the Tax Foundation, so the deduction disproportionately benefits high earners.³

The cap on the state and local tax deduction was raised from $10,000 to $40,000 for 2025 through 2029, rising 1% a year. The higher cap phases down for taxpayers earning above $500,000 and disappears above roughly $600,000, where the deduction reverts to $10,000. In 2030, the $10,000 cap returns permanently for all filers.⁹ Because taxpayers must itemize to claim it, the higher cap primarily benefits upper-middle-income and high-income households in high-tax states.

Corporate Tax Cuts

The law permanently reinstated full expensing of research and development costs and 100% bonus depreciation for equipment. An Institute on Taxation and Economic Policy analysis found that in 2025, Amazon, Alphabet, Meta, and Tesla together paid an effective federal tax rate of just 4.9% on $315 billion in U.S. profits, saving a combined $51 billion against the statutory 21% rate. Tesla paid nothing on $5.7 billion of U.S. income. The specific drivers included $15.3 billion from accelerated depreciation, $13.8 billion from research expensing, $9.7 billion from stock-option deductions, and $8.8 billion from research credits.¹⁰

The law also cut taxes on corporations’ foreign profits by an estimated $167 billion by repealing provisions designed to tax offshore earnings at higher rates, and added industry-specific breaks for rural real-estate lending, distilled spirits, real estate investment trusts, oil and gas drilling costs, and bond financing for spaceport investors.⁶

Who Actually Pays More

The distributional picture across independent analyses runs the opposite direction from a tax hike on the wealthy. According to an April 2026 ITEP analysis, the richest 1% of Americans will receive $117 billion in tax cuts in 2026 alone, and at least $1 trillion over the next decade. ITEP noted that the $117 billion annual figure exceeds the combined 2026 federal budgets of the Departments of Education, Transportation, Justice, and State, plus NASA, the EPA, and the national endowments for the humanities and the arts.¹¹

For most Americans, the combined effect of the law, tariffs, and the loss of enhanced health insurance subsidies is a tax increase. The middle 20% face an average tax increase of about $900 in 2026, equal to roughly 1.2% of their income. For the poorest 20%, the effective tax increase amounts to 3.1% of income.¹¹¹²¹³ ITEP concluded that tariffs and the subsidy expiration “more than offset any tax cuts provided by OBBBA” for everyone outside the top 5%.

The enhanced Marketplace premium tax credits, first enacted in the American Rescue Plan Act of 2021 and extended through the Inflation Reduction Act of 2022, expired at the end of 2025 and were not renewed in the law. The Urban Institute projected 4.8 million additional people would become uninsured in 2026, with low-income enrollees facing premium increases that in some cases more than quadrupled.¹⁴

The child tax credit rose from $2,000 to $2,200 per child and was indexed to inflation, but the law made no changes to refundability or the phase-in. About 17 million children in low-income families remain unable to receive the full credit, and by 2030 the bottom 40% of households are projected to experience a net loss in benefits from the child tax credit changes while the top 40% see ongoing gains.¹⁵

Where the Money Comes From

The tax cuts are partially paid for with nearly $1 trillion in Medicaid reductions over the next decade. The largest driver is a new work-reporting requirement for Medicaid expansion enrollees, projected to account for $326 billion in savings. Other major sources include limits on state provider tax arrangements ($191 billion) and restrictions on state-directed Medicaid payments ($149 billion).¹⁶

Beginning in January 2027, Medicaid expansion beneficiaries must work, volunteer, or participate in work-related activities for 80 hours a month to keep coverage, and states must conduct eligibility rechecks every six months instead of annually. Estimates suggest 10 million to 15 million people are at risk of losing coverage.¹⁷

The Center for American Progress framed the arithmetic directly: roughly $1 trillion in Medicaid cuts paired with roughly $1 trillion in tax reductions flowing to the top 1% over the coming decade, with about $500 billion of that going to the top 0.1% — roughly 200,000 households earning more than $2 million a year.¹⁶ The law is projected to add $4.6 trillion to the federal debt over the next decade.¹¹

1
CNBC. Trump Proposes Top Tax Rate Hike on Wealthy Americans
2
Institute on Taxation and Economic Policy. Trump’s Proposed Higher Tax Rate on Richest Taxpayers Would Affect Very Little of Their Income
3
Tax Foundation. Trump Millionaire Tax: Raising Top Income Tax Rate
4
CBS News. Senate Debate on Trump One Big Beautiful Bill
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Tax Foundation. One Big Beautiful Bill Act Tax Changes
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Center for American Progress. 7 Ways the Big Beautiful Bill Cuts Taxes for the Rich
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IRS. What’s New – Estate and Gift Tax
8
Stinson. One Big Beautiful Bill Explained
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Bipartisan Policy Center. SALT Deduction Changes in the One Big Beautiful Bill Act
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ITEP. Four Big Tech Companies Avoid $51 Billion in Taxes
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ITEP. Year One of Trump Republican Tax Policy Consequences
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ITEP. Trump OBBBA Taxes Lower for the Rich, Tariffs
13
CNBC. Trump Tariffs Taxes Poor Rich
14
Urban Institute. 4.8 Million People Will Lose Coverage in 2026
15
Brookings Institution. How Children Are Treated in the One Big Beautiful Bill Act
16
Center for American Progress. $1 Trillion in Medicaid Cuts, $1 Trillion in Tax Giveaways for the Richest 1 Percent
17
Urban Institute. Medicaid Cuts in One Big Beautiful Bill Act