Big or Small: Are You a Winner or Loser Under Trump’s Tax Law?

Understanding the Impact of Tax Policy Changes on Different Income Groups

The Congressional Budget Office has analyzed potential changes in tax policies and their effects on various income groups. The findings highlight a significant disparity, with lower-income households facing financial losses while higher earners stand to benefit substantially. These shifts could affect your take-home pay and require careful planning to navigate the evolving financial landscape.

How Different Income Levels Are Affected

According to projections from the Congressional Budget Office, the following estimates show the projected annual change in after-tax income for different income ranges from 2026 to 2034:

• $20,000 and under: 3.9% loss (about –$1,559 per year)
• $20,000–$35,000: 1.2% loss (about –$749 per year)
• $35,000–$50,000: 0.4% loss (about –$312 per year)
• $50,000–$60,000: 0.2% win (about $110 per year)
• $60,000–$75,000: 0.5% win (about $675 per year)
• $75,000–$90,000: 0.8% win (about $1,320 per year)
• $90,000–$110,000: 1.1% win (about $2,090 per year)
• $110,000–$140,000: 1.3% win (about $2,090 per year)
• $140,000–$200,000: 1.5% win (about $3,275 per year)
• $200,000 and up: 2.3% win (about $12,044 per year)

These figures are based on the latest U.S. Census data and 2025 federal tax brackets, reflecting the consensus from nonpartisan tax policy organizations. Exact income boundaries may vary slightly, and estimated losses or wins are based on the midpoint of the salary range.

Why High Earners Benefit More

The distribution makes sense when considering that high earners pay the majority of taxes. When tax rates drop, those who pay the most naturally see the biggest dollar gains. However, this is not comforting for those among the lower-income households facing increased financial pressure.

Additional Challenges for Low-Income Americans

The tax changes come with additional requirements that could put some low-income Americans at greater risk. For example, adults aged 19 to 64 without dependents who receive Medicaid through the Affordable Care Act expansion must now work at least 80 hours per month to maintain eligibility. Volunteering or educational programs can substitute for work hours, but this requirement adds a new hurdle for many.

Exemptions exist for physically disabled individuals, parents with children under 14, and pregnant women. However, for others relying on these benefits, the work requirement could create hardships that compound the financial losses projected by the Congressional Budget Office.

Low-income households receiving Social Security, Medicaid, food stamps, and other taxpayer-funded benefits may see their overall financial picture worsen, though the exact impact depends on individual circumstances.

Steps to Protect Your Finances

Regardless of your income level, you can take steps to prepare for the new tax landscape. Here are some actions you can consider:

• Review your current tax withholdings and adjust your W-4 if needed to avoid surprises at tax time.
• Maximize pre-tax contributions to retirement accounts and health savings accounts, which lower your taxable income and provide a buffer against higher taxes.
• Contribute to a 401(k) if available, and aim for at least the employer match.
• Consider accelerating deductions, such as charitable giving or property tax payments, if you anticipate an increase in your tax rate.
• Use tax-loss harvesting by selling investments at a loss to offset gains, which can help reduce your tax bill.
• Earn as much as possible on your emergency savings. This is especially important if you anticipate higher expenses or reduced benefits.
• Diversify your savings by using taxable, tax-deferred, and tax-free accounts to give yourself flexibility as tax laws change.

Financial Tools to Help You Save

If you're looking for ways to boost your savings, consider high-interest banking options. For instance, SoFi offers a combination checking-and-savings account with a competitive interest rate. If you set up direct deposit, you can currently earn a 3.8% annual percentage rate, which is significantly higher than the national average.

Additionally, there are bonuses available for direct deposits. For example, depositing $5,000 or more within the first 25 days could earn you a $300 bonus. Even smaller deposits can qualify for smaller rewards.

Banking has evolved, and it's essential to adapt to these changes. By choosing a modern banking solution, you can maximize your savings and better manage your finances in the face of upcoming policy shifts.