IRS Data: Middle Class Americans Saw Significant Tax Reduction from Trump Tax Cuts

The Internal Revenue Service’s released 2019 Statistics of Income (SOI) data, the agency’s most recent available data, shows that middle income American families saw a significant tax cut – measured as the percentage decrease in “total tax liability” between 2017 and 2019 – from the Trump-Republican Tax Cuts and Jobs Act (TCJA). Similarly, Americans saw significant decreases in tax liability from 2017 to 2018.

Total tax liability includes federal income taxes as well as taxes listed on IRS form 1040 such as payroll taxes including social security and Medicare taxes. The TCJA significantly reduced federal income taxes but did not modify payroll taxes. 

As the data notes, Americans with incomes between $50,000 and $100,000 saw a substantial decline in their tax liability:

• Americans with adjusted gross income (AGI) between $50,000 and $74,999 saw a 15.2 percent reduction in average tax liabilities between 2017 and 2019.  

• Americans with AGI of between $75,000 and $99,999 saw a 15.6 percent reduction in average federal tax liability between 2017 and 2019. 

Middle-class Americans in key states were delivered significant tax cuts:

• Floridians with AGI between $50,000 and $74,999 saw a 19.6% reduction. Floridians with AGI between $75,000 and $99,999 saw a 17.2% reduction. 

• New Yorkers with AGI between $50,000 and $74,999 saw a 18.9% reduction. New Yorkers with AGI between $75,000 and $99,999 saw a 12.4% reduction. 

• Californians with AGI between $50,000 and $74,999 saw a 18.4% reduction. Californians with AGI between $75,000 and $99,999 saw a 14% reduction. 

The TCJA also caused millions of Americans to see an increased child tax credit, and millions more qualified for this tax cut for the first time. The TCJA expanded the child tax credit from $1,000 to $2,000 and raised the income thresholds so millions of families could take the credit.

The TCJA also repealed the Obamacare individual mandate tax by zeroing out the penalty. Prior to the passage of the bill, the mandate imposed a tax of up to $2,085 on households that failed to purchase government-approved healthcare. Five million people paid this in 2017, and 75 percent of these households earned less than $75,000.

Additionally, the TCJA enacted a high alternative minimum tax (AMT) exemption and raised the income level at which the exemption begins to phase out. Congress enacted the Alternative Minimum Tax (AMT) in 1969 following the discovery that 155 people with adjusted gross income above $200,000 had paid zero federal income tax. Over time, the AMT grew so large that millions of Americans paid the tax and millions more saw increased tax complexity. The TCJA caused the number of AMT taxpayers to fall from more than 5 million in 2017 to just 263,720 in 2018. 

For years, President Joe Biden has falsely claimed that the 2017 Tax Cuts and Jobs Act (TCJA) passed by the Congressional Republicans and President Trump overwhelmingly benefited “the rich” and large corporations and did little or nothing to help middle class families.

Even left-leaning media outlets have (eventually) acknowledged the tax cuts benefited middle class families. The Washington Post fact-checker gave Biden’s claim that the middle class did not see a tax cut its rating of four Pinocchios. The New York Times characterized the false perception that the middle class saw no benefit from the tax cuts as a “sustained and misleading effort by liberal opponents.”  

Despite the Left’s rhetoric, the TCJA directly reduced taxes for American middle-class families and grew the economy, increasing wages and creating more job opportunities for Americans.