President Donald Trump signed his “Big Beautiful Bill”, also known as the Senate Reconciliation Bill, into law on July 4th. Although he touts the bill as a win for middle- and working-class Americans, that could not be further from the truth. Analysis from the Institute of Taxation and Economic Policy, a non-partisan tax policy organization shows the reality: Trump’s bill funnels money into the pockets of the ultra-wealthy at the expense of working Americans.
Over 70% of tax cuts included in the reconciliation bill will go to the richest 20% of Americans. 10% would go to the middle 20% of Americans and less than 1% will go to the bottom fifth. Trump’s “Big Beautiful” reconciliation bill will lead to $1 trillion in tax cuts for the top 1% over the next decade. In Pennsylvania, the top 1% will receive almost $4 billion in tax cuts in 2026 alone.
These tax cuts come from a few places, including changes to tax rates and brackets, the pass-through business deduction, a more generous alternative minimum tax, and changes to itemized deductions, and the estate and gift tax.
Pennsylvanians in the bottom fifth of income earners will save a paltry $40 in taxes due to changes in this bill, or .3% of their income on average. Pennsylvanians from the top 1% on the other hand, will save $56,510 a year, or 2.8% on average. Why should the ultra-wealthy get a tax break worth more than what over 40% of Pennsylvanians make in an entire year while those who need it the most get almost nothing? This tax plan redistributes money from working class Pennsylvanians into the hands of the ultra-wealthy.
Figure 1, compiled by the Institute of Taxation and Economic Policy, shows the impact of Trump’s tax plan on Pennsylvanians at different income levels. The regressive nature of this plan is clear- those at the top benefit way more than working and middle-class Pennsylvanians.
| Impacts of Tax Provisions in the Senate GOP Big Beautiful Bill in 2026 in Pennsylvania | |||||||
| Income | Income Range | Average | Tax Change | Average | Tax Change as | Share of | |
| Group | From | To | Income | 1000s | Tax Change | % of Income | Tax Change |
| Bottom 20% | $0 | $25,600 | $14,100 | -$45,200 | -$40 | -0.3% | 0% |
| Second 20% | $25,600 | $53,700 | $39,000 | -$791,300 | -$570 | -1.5% | 4% |
| Third 20% | $53,700 | $88,800 | $69,600 | -$2,202,500 | -$1,590 | -2.3% | 11% |
| Fourth 20% | $88,800 | $149,100 | $117,400 | -$3,502,000 | -$2,530 | -2.2% | 17% |
| Next 15% | $149,100 | $334,700 | $206,900 | -$5,198,000 | -$5,000 | -2.4% | 26% |
| Next 4% | $334,700 | $833,700 | $486,100 | -$4,780,100 | -$17,260 | -3.6% | 24% |
| Top 1% | $833,700 | And Above | $2,030,900 | -$3,865,300 | -$56,510 | -2.8% | 19% |
Source: State-By-State Estimates, “Analysis of Tax Provisions in the Senate Reconciliation Bill: National and State Level Estimates” , Institute of Taxation and Economic Policy https://itep.org/analysis-of-tax-provisions-in-senate-reconciliation-bill/
Even the very minimal tax decreases for working-class Pennsylvanians will be completely eaten by President Trump’s proposed tariffs. People with lower incomes spend a larger percentage of their income on necessities and will therefore be more affected by price increases from tariffs. For 80% of Americans, the tariffs almost completely outweigh any money saved from tax cuts. Those in the bottom 40% by income will be worse off under Trump’s economic plans, even before factoring in cuts to social service programs like Medicaid and SNAP. For example, the bottom 20% of income earners are expected to pay 2.4% more because of tariffs, a type of tax, while only receiving a .3% tax cut under the Reconciliation Bill.
Figure 2, compiled by the Institute on Taxation and Economic Policy illustrates the effect of both the tax changes from the Reconciliation Bill and the tax chances from the proposed tariffs by income level.
Popular tax cuts President Trump bragged about on the campaign trail, such as no taxes on tips, will not help working class Americans to the extent that he states. The reconciliation bill does not completely stop taxes on tips, rather workers will be able to deduct up to $25,000 in tips from their federal taxes annually. After that, tips will be taxed. For low income tipped workers who do not have very much federally taxable income, this bill will have minimal effects. The no tax on overtime is equally as misleading as it could encourage excessive hours of work while encouraging employers to keep base pay low.
One other component affecting taxes in the reconciliation bill is the cap on deductions allowed for state and local taxes (SALT). Originally introduced in Trump’s tax bill as a temporary measure in 2017, caps on SALT deductions were unpopular with Republicans in states with the highest taxes on high income earners, as they would affect their wealthy constituents more. Trump’s reconciliation bill makes these deductions permanent and raises the SALT deduction cap to $40,000 for the next five years for people earning under $500,000 before reverting it to $10,000 a year for everyone permanently. Making SALT deduction caps permanent does decrease the tax cuts for the richest 1% but does not outweigh the massive tax cuts in other parts of the bill. The wealthy are unquestionably better off under this bill, even with caps on SALT deductions.
These tax cuts for the ultra-rich come at the expense of millions of Americans relying on Medicaid for their health insurance. It is estimated that almost $930 billions of dollars of funding for Medicaid will be cut over the next ten years, creating disastrous consequences for Americans relying on the program for their insurance. Estimates by the Congressional Budget Office show that the passage of this bill will lead to 16 million more uninsured Americans by 2036. The loss of insurance for these Americans is expected to cause over 50,000 deaths a year.
Another $170 billion will be spent on supporting Trump’s immigration and border goals, including significant funding increases to Immigration and Customs Enforcement. An additional $30 billion is granted to hire more ICE personnel and $45 billion is granted for the creation of more immigration detention centers, expanding capacity to over 100,000 beds. After this bill is passed, ICE will be the highest-funded law enforcement agency in the country. Not only does Trump’s immigration policy have the potential to violate immigrants due process rights and cause significant human suffering, it also has the potential to significantly harm the job market. If Trump meets his goal of deporting 1 million people a year, it is estimated that it will destroy almost 6 million jobs.
Even with the cuts to Medicaid, this bill is expected to add $3 trillion to the national deficit by the end of 2034.
President Trump’s reconciliation bill is a travesty for working and middle-class America. Tax cuts for the ultra-wealthy come at the expense of everyone else, and this bill has the potential to cause significant human suffering. Millions of people will lose their health insurance and SNAP benefits, and immigrants will have to live in fear of an increasingly authoritarian and militarized ICE, all so the wealthy can get their tax break.