03.31.26

Republicans Lowered Americans’ Taxes. Blue States Are Taking the Opposite Approach.

As Republicans Put More Money in Americans’ Pockets, Democrats in Blue States Across the Country Are Finding New Ways to Raise Taxes

Politico3

(Click here to download)

REPUBLICANS’ LANDMARK WORKING FAMILIES TAX CUTS LAW IS PUTTING MORE MONEY IN AMERICANS’ POCKETS AND CREATING NEW OPPORTUNITIES TO GET AHEAD

  • Thanks to Republicans’ Working Families Tax Cuts law, this year, the average tax filer will receive a federal tax cut of $3,750. (U.S. Department of the Treasury: Working Families Tax Cuts – accessed 3/31/26)
  • Individuals making less than $50,000 per year are receiving the largest proportional benefit of Republicans’ tax cuts. (U.S. Senate Committee on Finance: One Big Beautiful Bill: New Tax Relief Overwhelmingly Benefits Working Class – 7/1/25)
  • “President Donald Trump’s new tax deduction for overtime looks like a hit this filing season, and that’s shaping up to be a big challenge for Democrats. Nearly 20 million taxpayers so far have claimed the break, internal Treasury data shows.” (Politico: Trump’s overtime tax break is a hit. Democrats aren’t sure what to do about it. – 3/31/26)
  • “So far, the administration says the overtime deduction, which allows couples to deduct up to $25,000, has shown up on about 23 percent of returns. About 17 percent of taxpayers have claimed a new $6,000 per-person deduction for seniors.” (Politico: Trump’s overtime tax break is a hit. Democrats aren’t sure what to do about it. – 3/31/26)
    • “A single adult, making $75,000, of which $10,000 is qualified overtime: Tax cut of $4,192” (U.S. Senate Committee on Finance: Working Families Tax Cuts Bring Bigger Paychecks – 1/16/26; Tax Foundation: 2026 Tax Calculator: How the One Big Beautiful Bill Act’s Tax Changes Will Affect You – 10/1/25)
  • The Working Families Tax Cuts also created new opportunities for workers, including no tax on tips:
    • “A single adult, making $30,000, of which $10,000 are qualified tips: Tax cut of $1,462” (U.S. Senate Committee on Finance: Working Families Tax Cuts Bring Bigger Paychecks – 1/16/26; Tax Foundation: 2026 Tax Calculator: How the One Big Beautiful Bill Act’s Tax Changes Will Affect You – 10/1/25)
    • According to the National Restaurant Association, no tax on tips “could return up to $421 million to the pockets of restaurant workers across the country.” (WV MetroNews: Capito meets with state restaurant workers about Working Families Tax Cut – 1/25/26)
  • “The new tax law also raised and extended the maximum child tax credit to $2,200 per child for 2025, and scheduled future inflation adjustments.” (The Wall Street Journal: Can ‘Trump Accounts’ for Babies Change the Economics of Having a Family? – 12/2/25)
  • The law also increases the employer-provided child care credit from $150,000 to $500,000: “All businesses providing employee child care are eligible for a tax credit, and there are expanded benefits for small businesses with less than $31 million in gross receipts for 2025…” (CNBC: Biggest Trump tax cut benefits for small business owners to keep more income on Main Street – 10/5/25)
  • Republicans created Trump Accounts, tax-deferred investment accounts that can be opened by any parent with a child under 18 who has a Social Security number. (The Hill: Treasury to hold summit on Trump accounts – 1/25/26)
    • Additionally, “children in the United States with a Social Security number born between Jan. 1, 2025, and Dec. 31, 2028, will be given a stock market account with a one-time $1,000 deposit from the Treasury that will grow similarly to individual retirement accounts, or IRAs.” (The Hill: Treasury to hold summit on Trump accounts – 1/25/26)

MEANWHILE, IN BLUE STATES, DEMOCRATS ARE PROPOSING A SLEW OF NEW TAXES

  • “A buoyant stock market and strong capital gains have turbocharged tax revenue in most states, especially those with progressive tax systems. Total tax revenue across the 50 states increased 43% between 2019 and 2025, twice as much as inflation. But Democrats and their public union allies want more—much more.” (The Wall Street Journal: Editorial: Democrats Are on a Taxing Binge – 3/22/26)
  • “Believe it or not, [Democrats] are showing across the country that they want to raise taxes.” (The Wall Street Journal: Editorial: Democrats Are on a Taxing Binge – 3/22/26)
  • Sens. Cory Booker (D-N.J.) and Chris Van Hollen (D-Md.) both released tax proposals that would raise taxes on businesses and lower GDP: “On net, we estimate both proposals would increase the federal budget deficit and reduce long-run GDP.” (Tax Foundation: Details and Analysis of the Van Hollen and Booker Tax Cut Plans – 3/16/26)
  • Virginia: “Despite campaigning on making life more affordable for Virginians, Democratic lawmakers in Richmond introduced more than 50 new taxes and tax increases this month during the General Assembly session.” (WJLA: Virginia Democratic leader responds to outrage about tax increase proposals – 1/30/26)
    • “Taxes on concerts, counseling, electric leaf blowers, Amazon deliveries, Door Dash, Uber Eats, and guns and ammunition are among a flood of proposals the Democratic majority in the Virginia General Assembly introduced.” (WJLA: Virginia Democratic leader responds to outrage about tax increase proposals – 1/30/26)
  • California: Many Democrat leaders are supporting a referendum “to impose a 5% wealth tax on residents with more than $1 billion in net worth… The tax would even be levied on illusory assets. Silicon Valley investors who own super-voting shares in a company would be taxed on their voting rights, rather than the value of their shares. A startup founder could be required to pay tax on the 25% of voting rights he controls even if he only owns 5% of shares.” (The Wall Street Journal: Editorial: Democrats Are on a Taxing Binge – 3/22/26)
  • Washington: “Democrats have passed a 9.9% income tax on millionaires, despite a state constitutional ban on a graduated income tax. The slippery slope to an income tax began in 2022 when Democrats enacted a 7% tax on capital gains exceeding $250,000, disguised as an ‘excise tax’ on asset sales. Last year they raised the rate to 9.9% on capital gains over $1 million. Now they’re extending the 9.9% tax to all forms of income. Democrats also included a sneaky provision that only adjusts for inflation every other year.” (The Wall Street Journal: Editorial: Democrats Are on a Taxing Binge – 3/22/26)
    • “In the past few years, Democrats in Olympia have raised taxes on real-estate sales, business gross receipts and estates (to 35% from 20%), while extending the state’s 6.5% sales tax to business services.” (The Wall Street Journal: Editorial: Democrats Are on a Taxing Binge – 3/22/26)
  • New York: “Albany Democrats are proposing income, corporate and real-estate tax hikes to fund more welfare and public-worker benefits. The Assembly wants to raise the top state-and-local income-tax rate to 15.9% from 14.8%, and the Senate to 15.3%. Democrats also want to raise the state top corporate tax rate and let New York City raise its rate. That would make the top business tax rate nearly 20% in New York City.” (The Wall Street Journal: Editorial: Democrats Are on a Taxing Binge – 3/22/26)