Washington, D.C. – A sweeping tax bill advanced by House Republicans this week promises significant relief for wealthy taxpayers by extending and expanding the 2017 Tax Cuts and Jobs Act (TCJA), but it also includes a lesser-known provision that could raise taxes for high earners, potentially curbing their charitable giving and real estate activity. The legislation, hailed by proponents as a cornerstone of President Donald Trump’s economic agenda, has sparked fierce debate over its balance of benefits for the ultra-wealthy against its impacts on working families and federal deficits. As the bill moves toward a House vote before the Memorial Day recess, critics warn its hidden costs could reshape tax planning for America’s richest households.
The bill, crafted by the House Ways and Means Committee, makes permanent the TCJA’s lower individual tax rates, including the 37% top rate for incomes above $609,351 for individuals or $731,201 for couples. It also introduces new breaks, such as an expanded pass-through business deduction, increasing from 20% to 23% of qualified business income, which could save millionaires tens of thousands annually. Additionally, the estate tax exemption would rise to $15 million for individuals and $30 million for couples in 2026, up from $14 million, delivering what the Center for American Progress calls “a windfall for the top 0.1%” of taxpayers. Other provisions include a $5,000 tax credit for donations to private school scholarship funds, which critics argue allows wealthy investors to dodge capital gains taxes by donating securities.
Yet, buried in the bill is a provision that limits the value of itemized deductions for high earners, effectively raising their tax burden. According to Kyle Pomerleau of the American Enterprise Institute, this change reduces the deduction benefit from 37 cents to 35 cents per dollar for top taxpayers, increasing the cost of charitable contributions and mortgage interest deductions. “It’s a stealth tax hike,” Pomerleau told CNBC, noting it could discourage big donations and affect luxury real estate purchases, though many wealthy buyers pay cash. The bill also proposes a new tax on private foundations: 5% on investments for those with $250 million to $1 billion in assets, and 2.8% for those between $50 million and $250 million, further squeezing high-net-worth philanthropy.
The bill’s champions, led by Ways and Means Chairman Jason Smith, argue it protects Americans from a looming 22% average tax hike if the TCJA expires. “The average family of four will save $1,700—nine weeks of groceries,” Smith said, touting additional relief like no taxes on tips, overtime pay, or auto loan interest for American-made cars. The package also expands the Child Tax Credit and raises the state and local tax (SALT) deduction cap to $30,000, a win for high-tax state Republicans. Smith claimed the bill would save 6 million jobs and generate $750 billion in small business growth, though independent estimates, like those from the Committee for a Responsible Federal Budget, peg the cost at up to $11.95 trillion over a decade.
Critics, including Democrats and progressive groups, slam the bill as a giveaway to the rich at the expense of vulnerable Americans. Rep. Don Beyer (D-VA) called it “a tax cut for billionaires that does little for regular people,” pointing to provisions like the pass-through deduction, where half the benefits already go to millionaires. The Center for American Progress estimates the top 1%—households earning over $743,000—would see average tax cuts of $62,000, while the bottom 60% get just $400. To offset revenue losses, the bill cuts $880 billion from Medicaid, $230 billion from SNAP, and $330 billion from student aid over ten years, moves that could leave 14 million without health coverage by 2034, per the Center on Budget and Policy Priorities. “It’s Robin Hood in reverse,” said Colin Seeberger of CAP.
Public sentiment is mixed. On social media, users like @4TaxFairness highlighted the disparity, noting the top 0.1% could gain $107,000 from the pass-through break, while working families might see $40 to $50. Others, like @AllonAdvocacy, praised the bill’s “MAGA savings accounts” and estate tax changes but acknowledged its hefty price tag. Polls show broad opposition to tax cuts for the wealthy, with a majority of voters favoring deficit reduction over extending the TCJA, according to the Center for American Progress.
The bill’s path forward is uncertain. House Speaker Mike Johnson aims to pass it before mid-July to raise the $4 trillion debt ceiling, as urged by Treasury Secretary Scott Bessent. Senate Republicans, wary of the hidden tax hike and massive spending cuts, may demand changes, especially after Trump’s earlier suggestion of a 40% top rate for millionaires was quashed. Regulatory hurdles and Democratic opposition could further complicate reconciliation talks. As Congress debates, the bill’s blend of tax breaks and hikes for the wealthy will remain a flashpoint, with families, philanthropies, and the federal budget hanging in the balance.
