Lower Individual Rates

Advancing American Freedom Foundation is a nonprofit institution that promotes and defends policies that elevate traditional American values.

PLYMOUTH INSTITUTE FOR FREE ENTERPRISE LOWER INDIVIDUAL TAX RATES Preston Brashers, Research Fellow APRIL 2026

TOPLINE: The One Big Beautiful Bill (OBBB) permanently extended the 2017 Tax Cuts and Jobs Act’s (TCJA’s) changes to individual tax brackets. Almost all working Americans are in a lower tax bracket than if TCJA had expired. This includes small businesses that file individual taxes as pass-through entities.

Single taxpayers (standard return, no credits) **

2026 Taxes if TCJA had expired 2026 Tax Brackets Under OBBB

* Income Range Marginal Tax Rate * Income Range Marginal Tax Rate $0 – 13,900 No tax $0 - 16,100 No tax $13,901 - 26,400 10% $16,101 - 28,500 10%

$26,401 - 64,650 15% $28,501 - 66,500 12%

$64,651 - 136,850 25% $66,501 - 121,800 22%

$136,851 - 270,300 28% $121,801 - 217,875 24%

$270,301 - 571,350 33% $217,876 - 272,325 32%

$571,351 - 573,650 35% $272,326 - 656,700 35%

$573,651+ 39.6% $656,701+ 37%

** Note: Assumes no tax for income up to standard deduction amount plus (where applicable) one personal exemption. Income ranges for TCJA expiration hypothetical are approximate.

Married Joint Filers (standard return, no credits) ***

If TCJA had expired Permanent Tax Rates Under OBBB

* Income Range Marginal Tax Rate * Income Range Marginal Tax Rate $0 - 27,800 No tax $0 - 32,200 No tax

$27,801 – 52,800 10% $32,201 – 57,000 10%

$52,801 – 129,300 15% $57,001 - 133,000 12%

$129,301 – 232,600 25% $133,001 - 243,600 22%

$232,601 – 340,000 28% $243,601 - 435,750 24%

$340,001 – 585,300 33% $435,751 - 544,650 32%

$585,301 – 657,500 35% $544,651 - 800,900 35%

$657,501+ 39.6% $800,901+ 37%

*** Note: Assumes no tax on income up to standard deduction amount plus (where applicable) two personal exemptions. Income ranges for the TCJA expiration hypothetical are approximate.

Advancing American Freedom Foundation is a nonprofit institution that promotes and defends policies that elevate traditional American values.

BACKGROUND: TCJA reduced individual tax rates and adjusted tax brackets such that the vast majority of taxpayers received tax cuts regardless of their income. The small number of individual taxpayers who paid more taxes as a result of TCJA were primarily high-income taxpayers who had claimed high amounts of itemized deductions. TCJA eliminated and capped many itemized deductions, moving toward lower tax rates and a broader base. TCJA also streamlined the standard deduction-personal exemption system by suspending personal exemptions but more than made up for it by nearly doubling the standard deduction and increasing the Child Tax Credit. These changes were scheduled to expire after 2025.

• Ensured that taxpayers at all income levels avoided a tax hike in 2026. • Made permanent TCJA’s changes to tax rates, brackets, the standard deduction,

and personal exemptions. • Built on TCJA’s nearly doubled standard deduction by adding further to it.

• The tax code remains highly progressive, with high-income individuals paying a

larger share of their incomes in taxes than low-income Americans (see chart). • High marginal tax rates discourage work and entrepreneurship. • OBBB’s reductions in tax rates represent a tax cut of about $2.2 trillion over nine

years (2026-34). • This reform also reduces taxes for small businesses that file as pass-throughs.

Where Can I Find the Changes? OBBB Section 70101-70103;

26 U.S.C. § 1(f), 63(j), 151(d).

$0 $250,000 $500,000 $750,000 $1,000,000

Federal Income Taxes as Share of Income

Income (Married Joint Filers)

Big Beautiful Bill Extended Lower Tax Rates Across

Notes: Chart shows average tax rate by income for married joint filers claiming the standard deduction and no tax credits under OBBB (red), compared to if TCJA had been allowed to expire (blue).

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