Tax Bill

The White House has stated that the biggest tax breaks of the “Big, Beautiful, Bill” go to the lowest income Americans and will put $10,000 in the pockets of America’s “typical working families.” How this benefit for “typical working families” is calculated is unclear.

According to the House Ways and Means Committee, families earning less than $30,000 each year would receive the highest percentage reduction (27%) in taxes, while families earning about $100,000 could receive a reduction of about 12% and families earning more than $200,000 could see reductions of between 2.7 and 3.5%. The apparent tax windfall for families in the lowest income categories is misleading because these families often pay little to no taxes to begin with and are the biggest beneficiaries of social programs that are being cut by the bill.

So, what we need to know is what the full impact of the bill will be on families with different incomes when the cuts to those social programs — Medicaid, food assistance programs, student loans, among others — are taken into account.

The respected, non-partisan Congressional Budget Office estimates that the lowest 30% of earners stand to lose money.¹ Estimates may vary from other analysis sources and versions of the bill.

The figure shows how the tax policy could affect you depending on your average household income after taxes beginning in 2026.   It shows that if you are in the lowest income bracket (lowest 10%, less than $40,000), despite a modest tax reduction, you stand to lose about $1600 due to cuts in Medicaid, SNAP, and educational grants.  Similarly, if you earn about $76,000, you lose a net $312 per year. By contrast, families earning more than $517,000 (the upper 10%) per year could gain a net of about $1200.

For Vinalhaven in particular, about half our households could stand to lose money. In 2023, the Census Bureau estimated that the median household income, the income for half the households in Vinalhaven, is the 3rd decile on the above chart, or $72,272 (gross income, after tax income data not reported)